BoJ’s Uchida: We won't hike rates when markets are unstable

Bank of Japan (BoJ) Deputy Governor Shinichi Uchida expressed his view on the bank’s interest rate outlook, exchange value and the current market volatility.

Key quotes

Our interest rate path will obviously change if, as a result of market volatility, our economic forecasts, view on risks and likelihood of achieving our projection change.

Japan is not in an environment where we would be behind the curve unless we hike rates at set pace.

We won't hike rates when markets are unstable.

Personally believe US economy can achieve soft landing.

See no big change to Japan, US, economic fundamentals so market reaction to single US data appears too big.

Recent market moves are extremely volatile so watching impact of their moves on economy, prices with extreme vigilance, will respond appropriately in guiding policy.

We must maintain current degree of monetary easing for the time being.

Japan's real interest rate very low, monetary conditions very accomodative.

If economy, prices move in line with projections, it is appropriate to adjust degree of monetary easing.

Degree, speed of FX moves' impact on prices bigger than in past.

Weak yen and subsequent rise in import costs pose upside risks to inflation.

Short-term interest rate, at 0.25%, is still very low on real basis, so we continue to support economy with very loose policy.

Given rapid market volatility, we need to maintain current level of monetary easing.

Stock market volatility affects corporate activity, consumption so is important factor in guiding monetary policy.

Reversal of weak Yen means risk of inflation overshoot has diminished, which would affect our policy.

Expect Japan's consumption to stay solid.

Changes seen in Japan's labor market are structural and irreversable.

It is true over 10 years of massive monetary easing has caused various side-effects.

Our scheduled tapering of bond buying likely won't cause major changes in degree of monetary easing.

Short-term rates have bigger effect of stimulating economy than long-term rates.

Market reaction

The Japanese Yen sees a fresh bout of selling following these dovish remarks from the BoJ official, as USD/JPY storms through the roof to retest 147.50. The pair is currently trading at 146.82, still up 1.75% on the day.