MNI BRIEF: JGB Reduction Scale To Be "Suitable" - BOJ's Ueda

Bank of Japan Governor Kazuo Ueda said on Friday that BOJ would pursue a suitable reduction to its JGB buying programme, but declined to elaborate on any specific numbers.

Ueda told reporters that the BOJ needs to ensure the flexibility of long-term rates and also increase the predictability of market players with regard to the outlook for future JGB reduction. (See MNI POLICY: BOJ Mulls Cut In Bond Buys As Early As Next Week)

He also said that stock effects stemming from the BOJ's huge JGB balance will likely continue.

As for monetary policy, the BOJ will set appropriate policy interest rates on a meeting-by-meeting basis, while carefully examining the probability of achieving the 2% target, Ueda added. The more significant upside risks to prices will also pave the way for the BOJ to adjust the degree of easy policy, he added without elaborating further.

Foreign exchange moves will have significant impact on economic activity and prices, Ueda said, adding that the weak yen would increase upside risks to prices as corporate price-setting activity is strengthening.

When asked about the rise above 1% on the 10-year interest rate, Ueda added long-term interest rates are still accommodative from the viewpoint of real interest rates, as long-term inflation expectations rise.

Ueda did not rule out the possibility that the BOJ would decide on a detailed plan for the reduction of JGB buying and adjust the degree of easy policy at the next July meeting.