BoJ dove Yutaka Harada said today that “the economy has been weak recently, and the same can be said about prices”. Also, “there’s a risk the current sluggishness observed in prices will spill over to inflation expectations, further delaying a pick-up in inflation.” In addition, “the impact of the consumption tax hike scheduled for October this year also is a concern.”
Harada warned “if the economy deteriorates to the extent that achieving our price target in the long-term becomes difficult, it’s necessary to strengthen monetary easing without delay.” He also dismiss claims that the ultra-loose monetary policy hurts banks’ profits. He said “the deterioration of banks’ profitability is actually caused by a structural problem, which is that they are accumulating deposits despite a lack of borrowers.”
Released from Japan, trade surplus narrowed to JPY 60.4B in April. Exports dropped -2.4% yoy while imports rose 6.4% yoy. In seasonally adjusted terms, trade deficit narrowed to JPY -110.9B.Exports rose 0.6% while imports dropped -0.1%. Machine orders rose 3.8% mom in March, above expectation of 0.0% yo.