BoJ Dep. Gov. Wakatabe: Japan has yet to see inflation stably, sustainably hit BoJ's 2% target.

The Bank of Japan's Deputy Governor, Masazumi Wakatabe has said hitting a  2% inflation for several months won't be meeting BoJ's price target.

Key comments

Hitting 2% inflation for several months won't be meeting BoJ's price target.

Underlying trend inflation must reach or exceed 2% for a sustained basis for Japan's inflation expectations to change.

Appropriate to tighten monetary policy only when price gains driven by external factors trigger second-round effect, push up wages, inflation expectations.

Japan's economic recovery becoming clearer, recovery is likely to continue.

Must be mindful of risk supply constraints may last longer than expected, have a broader impact on the global economy.

Expect Japan's consumer inflation to reach about 1% in spring.

Expect japan's consumer inflation to move around 1% up through fiscal 2023.

Japan's inflation outlook has both upside, downside risks.

Japan firms' pass-through of rising costs to households may accelerate more than expected.

Japan has yet to see inflation stably, sustainably hit BoJ's 2% target.

Premature to normalise monetary policy in japan as economy only just recovering from pandemic's impact, inflation below BoJ's target.

Japan needs to achieve a 'high-pressure economy' where strong demand, tight job market boost wages, investment.

Japan's terms of trade worsening but that is due mostly to rising fuel import costs, rather than the impact of weak yen.

Japan's inflation expectations are not anchored at 2%.

BoJ is conducting monetary easing not just to push up prices, but to achieve a positive cycle in an economy where price rises are accompanied by higher wages, income and jobs.

Market implications 

The price of USD/JPY is unchanged on the statements as markets have priced these assumptions in already. instead, this week's Nonfarm Payrolls will be the key driver for US/JPN rates and the US dollar.