- BOJ can continue QE after CPI reaches 2% if it judges that gains are not sustainable
- long term rates likely to shoot up around time of QE exit as Japan would be out of deflation
- too early to talk about QE exit strategy
- it is possible to exit QE before 2% CPI actually achieved
I wish he’d make his mind up!
USDJPY a little higher at 102.25
- expects economy to resume growing in Q3 after sales tax hike
- lows JGB yields show market believes sales tax hike is commitment to fiscal consolidation
- BOJ not just focussed on CPI but looking at many price measures
- improvement in output gap likely to support CPI gains after currency impact fades