With regard to the Bank of Japan’s monetary policy assessment to be conducted in September, BOJ Deputy Governor Kikuo Iwata stressed at a press conference held in Yokohama on August 4 that “scaling down of the easy-money policy (based on the results of the assessment) is out of the question.”

The BOJ decided at its July 29 policy board meeting that it will assess the effects and problems of a series of monetary easing policies that it has implemented to date. Speculation spread within markets that the BOJ will ramp up its bond purchasing and reconsider keeping interest rates in negative territory. This has caused long-term interest rates to jump. It seems that Iwata tries to calm down markets by emphasizing that the BOJ will uphold its large-scale monetary policy.

Iwata noted that the BOJ has no plan to cut the 2% inflation target or switch to a mid-to-long term goal. Meanwhile, he did not elaborate much on negative interest rates, which are not well received by financial institutions. “We will examine the combination of policies (such as with purchasing government bonds) and which combination will work best,” he said. (Abridged)