BoJ’s Ueda: Japan's headline CPI around 3.5% is due to external, cost-push factors

More comments are flowing in from new Bank of Japan Governor Kazuo Ueda on Friday, as he addresses his first press conference that follows the monetary policy meeting.

Key quotes

Japan's headline CPI around 3.5% is due to external, cost-push factors, cannot be controlled by Japan's monetary policy.

No comment on stock price moves, levels.

Coronavirus-caused supply shocks and strong global inflationary pressures have spread to Japan.

Responding to inflation undershoot after premature rate hike is more difficult than responding to overshoot.

Risk of excessive inflation overshoot with cautious policy response is 'not zero', but there's also risk of inflation undershoot with hasty monetary normalisation.

Rising stock and other asset prices could positively affect consumption, capex, but there's risk of negative impact from 'going too far'.

Will consider more detailed description of risks in policy documents.

Market reaction

USD/JPY is extending the upside to refresh multi-month highs at 141.40 on Ueda’s dovish remarks. The pair is trading at 141.20, up 0.63% on the day.