TOKYO- The Bank of Japan will keep tapering its government bond purchases despite recent rises in yields, deputy governor Shinichi Uchida said on Friday, stressing its huge bond holdings continue to exert a strong stimulus effect on the economy.
Uchida also reiterated the central bank’s readiness to continue raising short-term interest rates if economic and price developments move in line with its projections.
“Japan’s economy is recovering moderately, albeit with some weaknesses,” Uchida told parliament, adding that underlying inflation was gradually accelerating toward the BOJ’s 2 percent target.
The remarks follow those by governor Kazuo Ueda, who warned of “very strong” uncertainty over the global economic outlook due in part to threats of higher tariffs by US President Donald Trump.
The BOJ raised short-term interest rates to 0.5 percent from 0.25 percent in January, and continues to taper its huge bond buying under a plan laid out in July last year.
