Seiji Adachi, a member of the Bank of Japan (BoJ) board, shared his insights on the central bank’s monetary policy and exchange rate outlook in recent statements. While he mentioned that the decrease in bond buying by BoJ for a single day did not have any policy implications, Adachi emphasized the importance of closely monitoring long-term interest rate movements and expressed concern about the impact of current foreign exchange rate fluctuations on the economy and prices.
Adachi also highlighted the need for monetary policy responses if these FX moves have a significant material impact on the economy and prices. He suggested that reducing bond buying should be done in stages to allow long-term yields to better serve as market signals. Adachi did not provide a specific timeline for reducing BoJ’s bond buying but stated that his inflation forecasts have not changed significantly since April.
Regarding the BoJ’s ETF holdings, Adachi mentioned the importance of seeking views from various experts and taking time to make decisions. He emphasized that it is too early to consider the timing of the next rate move and did not provide a specific opinion on Japan’s terminal rate or the sustainability of the recent rise in long-term interest rates in Japan.
In response to Adachi’s comments, the USD/JPY remained within its range above 157.00 and showed a modest 0.05% increase on the day.
