July policy decision wasn’t part of any exit from ultra-loose policy

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Bank of Japan (BoJ) Board member Toyoaki Nakamura is back on the wires on Thursday, noting that the “July policy decision wasn't part of any exit from ultra-loose policy.”

Additional comments

I wasn't against making YCC flexible, opposition was about timing.

Don't think July policy move is causing any market turmoil.

Japan's inflation isn't demand driven yet, which is why output gap remains in negative territory.

Japan's economic recovery required for BoJ to consider ending negative rate policy.

Decision on when to end negative rate policy will likely be made looking carefully at economic developments.

If Japan's economy achieves sustained recovery, we won't need ycc but unfortunately Japan's deflationary mindset has not be eradicated yet.

When there is feeling Japan's deflationary mindset is dispelled, we can get rid of YCC but now is not the time.

Market reaction

USD/JPY was last seen trading at 145.93, losing 0.20% on the day.

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