Yujiro Goto, FX Strategist at Nomura, notes that Kuroda's recent comments on Wednesday suggests that another rate cut by the BOJ is possible anytime, so that USD/JPY depreciation risks can be limited, and thus improve inflation prospects. Key Quotes "Household inflation expectations slowed further in January, according to the Cabinet Office. Some 6.1% of households replied that they expect prices to fall over the next 12 months, rising from 5.8% in December." "The share of households expecting prices to increase fell to 78.0% from 79.7% the previous month, the lowest since March 2013, before the BOJ announced its QQE1. Weighted average inflation expectations slowed to +2.28% from +2.33% for the fourth consecutive month." "In the bond market, break-even inflation expectations continue to fall, even after the surprising easing last Friday. The January bond investors’ survey by Nikkei Quick also showed weaker inflation expectations among bond investors, though the survey was conducted before the BOJ meeting." "Wednesday BOJ Governor Kuroda gave his first speech since Friday’s decision, repeating that the BOJ will pursue monetary easing by making full use of possible measures in terms of – quantity, quality and a negative interest rate." "He said that it is possible to cut the interest rate further from its current level, if judged necessary and that there is sufficient room for further monetary easing by extending negative interest rates, by mentioning the examples of the SNB, ECB and the Riksbank. Governor Kuroda also said further easing in terms of quantity and quality is possible, as possible technical obstacles have already been removed." "During the Q&A session, Governor Kuroda said that the interval of policy action would be irrelevant to whether easing is viewed as gradual or not. Governor Kuroda has stated that the BOJ would not take a gradual approach, unlike before his inauguration, and his comments today suggest the Bank would ease at any time, if it judges it necessary." "BOJ Governor’s comments on the scope of rate cuts and the timing of easing show that he likely wants investors to believe another rate cut is possible anytime, to limit USD/JPY depreciation risks, which worsen inflation momentum." For more information, read our latest forex news.