BoJ Governor Kazuo Ueda stressed the importance of not prematurely tightening monetary policy to ensure that Japan can sustainably achieve its 2% inflation target. However, Ueda also suggested potential adjustments to the Yield Curve Control (YCC) if the policy’s benefits and costs shift.
As for Japan’s inflation forecast, Ueda expects consumer inflation to slow down as global fuel and raw material prices have begun to decline. Despite this projection, he did not entirely dismiss the possibility of needing to revise this outlook. “We can’t completely rule out the possibility that this projection could prove wrong,” Ueda said, adding, “If that’s the case and if we see the need to revise our forecast, we’d like to act swiftly.”
Ueda elaborated on possible modifications to the YCC policy. “If the BOJ were to modify YCC in the future, there are various ways of doing so,” he stated. One potential approach he mentioned was targeting bond yields in the five-year zone, rather than the current 10-year zone.
“But I won’t comment on whether we would definitely do so, how likely this could happen, or under what conditions the BOJ would see this option as desirable,” Ueda said.
