Speaking before the Japanese parliament on Tuesday, Bank of Japan (BoJ) Governor Kazuo Ueda stated that the central bank still requires additional time to decide on the future of its exchange-traded fund (ETF) holdings.
Ueda emphasized that when considering the offloading of the BoJ’s ETF holdings, the central bank must carefully assess valuation and potential market disruption risks. He also noted that the BoJ’s extensive holdings of Japanese Government Bonds (JGBs) have a “stock effect,” which would likely result in a slight decrease in long-term yields. However, Ueda reassured that the pace of reduction in JGB holdings remains very gradual, ensuring the stock effect persists.
Regarding Japan’s economic health, Ueda mentioned that the output gap in the country is near zero, with no significant difference between the BoJ’s and the Cabinet Office’s estimates.
In the wake of these comments, the USD/JPY pair saw a continued pullback, hovering around 150.50, remaining largely unchanged on the day.
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