MNI BRIEF: Policy Change Due To Larger Hike Risk - BOJ's Ueda
Bank of Japan Governor Kazuo Ueda said on Thursday that Tuesday's decision to phase out easy policy before confirming the achievement of the 2% price target in a stable and sustainable manner was driven by desire to avoid a risk of rapid rate hikes.
Ueda told lawmakers the Bank could have phased out easy policy after confirming the achievement of the 2% price target.
“But there are the risks that the inflation rate might have risen above 2% and the BOJ would have raised the interest rate rapidly to restrict the upside risk to price," he said. "We decided on the policy changed, compared with the two risks." (See MNI BOJ WATCH: Ueda Says Rate Path Will Depend On Prices)
Ueda also said that he does not expect mortgage and lending interest rates to rise sharply as the rate hike was limited to 0.1% and the bank will continue to buy Japanese government bonds as it did previously, but in a flexible manner if needed.