In the post meeting press conference, BoJ Governor Haruhiko Kuroda admitted that “output gap is worsening sharply at present”. However, they won’t have a “huge immediate negative impact on medium- and long-term inflation expectations”. “I don’t think the risk of Japan sliding back into deflation is high,” he added.
Also, “it’s too early to exit from our massive monetary easing programme at this point. Western economies have been deploying monetary easing steps for a decade, and none of them are mulling an exit now.”
Regarding the march policy review, Kuroda maintained that yield curve control is “working properly”. In the review, ” we will seek how best to balance the need to curb the side-effects of yield curve control (YCC) while making it more effective … We also need to make our framework sustainable and be able to respond flexibly as needed.”
