Today,Japan Central BankMaintains interest rates unchanged and announces detailed plans to reduce bond purchases in July.

After the announcement, the market interpreted the Bank of Japan's meeting results as biased toward doves, with a more cautious pace of monetary policy normalization, causing the yen depreciation to accelerate, and the US dollar against the yen rose above the 158 level, with slight gains in Japanese stocks.

In the afternoon, Bank of Japan Governor Haruhiko Kuroda released hawkish comments in a speech, expressing concerns about the depreciation of the yen and suggesting that the bank may raise interest rates in July, and the scale of bond purchases may be large.

Subsequently, the yen exchange rate fluctuated violently, with the trend of depreciation slowing down. The latest US dollar against the yen was reported at 157.58.

Haruhiko Kuroda releases hawkish comments

In a speech, Bank of Japan Governor Haruhiko Kuroda said,The Bank of Japan is concerned about the impact of the weak yen on inflation.

He said that the recent depreciation of the yen is one of the factors that accelerate inflation. The central bank will respond appropriately to the trend of the yen, and if inflation continues to accelerate towards the 2% target, the Bank of Japan will raise interest rates.

Regarding the reduction of bond purchases,Haruhiko Kuroda said that the detailed plan for reducing government bond purchases decided by the policy committee on Friday will be announced after the next meeting in July. The Bank of Japan will seek the opinions of market participants on the plan.

"When reducing government bond purchases, it is important to maintain flexibility to ensure market stability while proceeding in a predictable manner.The scale of reduction may be significant, but the specific steps, framework, and degree will be decided after discussions with market participants."

He pointed out that as we reduce government bond purchases, the Bank of Japan's bond holdings will decrease, but the stock effect of the bonds we hold will continue to have an impact on the economy.

He added: "We don't have a specific timetable for how long it will take to (fully) reduce our balance sheet, but we have decided to start from about one to two years." '

Regarding raising interest rates,Haruhiko Kuroda said: "If potential inflation accelerates according to the central bank's forecast, the central bank will consider adjusting the degree of monetary support. If the economy and inflation exceed expectations, this will also be a reason for raising interest rates."

Regarding whether to raise interest rates and reduce bond purchases simultaneously in July,He said: "Depending on economic and inflation conditions, the central bank may of course decide to raise interest rates and adjust the degree of monetary support in July.""

About the depreciation of the yen,Kazuo Ueda said, "Exchange rate fluctuations will have a significant impact on the economy and prices. Recently, due to changes in corporate wages and pricing behavior, the impact on prices may intensify. The recent decline in the yen has pushed up prices, so we are closely monitoring exchange rate changes when guiding policies."

He said, "We are paying attention to the sustainability of monetary and exchange rate fluctuations, and how they affect prices and wages. This is something we pay attention to every day and in every policy meeting."

Regarding the 10-year government bond yield,Kazuo Ueda said, "We have seen a recent increase in long-term inflation expectations. Therefore,the actual long-term interest rate level is still very low, and we still have a sufficiently loose financial environment." "

Regarding consumer and inflation,Kazuo Ueda said, "We expect wages to rise moderately and inflation to be moderate as well. Therefore, we believe that real household income will gradually increase and bring about stronger consumption."

He pointed out, "Our view has not undergone major changes, that is,cost-driven inflation is easing while demand-driven inflation is gradually accelerating."However, there are signs that import prices are accelerating again, partly due to the weak yen."This may be the second round of cost-driven inflation.""