Highlights - BOJ's Shirakawa comments after rate meeting 09/08/2012
Bank of Japan Governor Masaaki Shirakawa said on Thursday that central bank purchases of foreign bonds would be equivalent to currency intervention, which falls under the jurisdiction of the government.
Shirakawa also told a news conference he did not see the need now to scrap the minimum 0.1 percent interest rate set for the BOJ's buying of government bonds via its asset-buying programme.
The BOJ kept monetary policy steady on Thursday but cut its assessment on exports and output as companies feel the pinch from slowing global growth, signalling its readiness to expand stimulus again if risks to the outlook increase.
Following are key quotes from Shirakawa's news conference that followed the rate decision.
MONETARY POLICY
"Buying foreign bonds would amount to currency intervention. As the finance minister has stated in parliament, this is something that falls under the government's jurisdiction.
"The BOJ has set a very clear target for the amount of assets we intend to purchase and we will stick to this plan.
"Long-term interest rates in advanced economies are falling as investors avoid risk. This is driving down Japanese bond yields too, so market players are refraining from selling JGBs. That's what was happening when the BOJ's bond buying auction failed to draw enough bids ...
"Market conditions always change and at present, I don't think we are facing difficulty achieving our (asset-buying) target. I therefore don't see the need now to scrap the minimum (0.1 percent) interest rate for the BOJ's JGB purchases.
"At our policy-setting meeting, we are always examining the market situation ... We will continue to buy assets while scrutinising market developments and the results of our upcoming asset-buying auctions."
GLOBAL ECONOMY
"The uncertainty surrounding when the U.S. and Chinese economies recover is certainly not small.
"Europe is stagnating, and this is likely to continue. We cannot expect high growth in the United States, but at the same time balance sheet adjustments are proceeding.
"We have to be mindful of the risk that Europe's problems worsen and lead to further market turmoil.
"In China, gains in consumer prices are slowing. We will start to see the impact of monetary easing and the front-loading of public works as officials stimulate the economy.
"Fiscal rebuilding, labour market reform and a stable financial system are needed to help solve Europe's problems.
"It's difficult to reach quick decisions on these issues, but I am confident that Europe has the will and the ability to solve its problems."
LIBOR
"It is important for banks to prevent manipulation of LIBOR in the future. We need to have trust in the rates set in the financial system. It is important to consider the impact on current financial transactions when considering alternatives to LIBOR."
YIELDS
"Japan's long-term yields are low. They are also low in other advanced countries. This is partly due to safe-haven flows as a result of Europe's crisis.
"In Japan's case, low yields also partly reflect confidence in Japan's fiscal reforms.
"Depending on progress in solving Europe's problems, it is possible for the decline in yields globally to reverse and cause some confusion in the financial system."
PRICES
"The output gap is important in determining the trend for prices. We have already seen the output gap narrow from a record. We expect the output gap to continue to improve. Import prices are also rising in part due to rising labour costs in China.
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