Bank of Japan (BoJ) Governor Kazuo Ueda is out with his thoughts following the hot Japanese inflation data, released earlier this Friday.

Key quotes

“Japan inflation likely to slow back below 2% in the middle of the current fiscal year.”

“Then likely to rebound thereafter through uncertainty regarding outlook is very high.”

“Current inflation rise is due to external, cost-push factors; not demand strengthening.”

“Tightening monetary policy in response to this would hurt the economy.”

“Inflation expectations must heighten for inflation to hit 2% sustainably.”

“The BoJ will continue easing with yield curve control.”

“We will add to easing if needed wihtout hesitation.”

“The cost of shifting policy prematurely and nipping positive bud toward achieving price target is extremely high.”

“The cost of waiting to ensure inflation is sustainably at 2% is smaller than shifting policy prematurely.”

“Appropriate to take time in determining when to modify easy monetary policy.”

“BoJ’s experience with QQE showed it will take to shift public perceptions that prices and wages won't rise much.”

“My view is that BoJ’s QE adopted in 2001 has had limited effect in stimulating the economy.”

Market reaction

Despite the dovish comments from the BoJ Chief, USD/JPY is keeping its heavy tone intact near 138.00. The pair is shedding 0.44% on the day at 138.06, as of writing.