BOJ Governor Ueda Signals Further Rate Hikes as Underlying Inflation Nears 2% Target
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- BOJ Governor Ueda signals continued rate hikes.
- “Cannot tolerate” underlying inflation rising above 2%.
- Future hike pace to consider exchange rates, AI demand, and geopolitical factors.
Bank of Japan (BOJ) Governor Kazuo Ueda stated on Friday that the central bank intends to continue raising interest rates as underlying inflation approaches its 2% target. Ueda emphasized that he “cannot tolerate” underlying inflation rising further above the 2% threshold, signaling a new phase for monetary policy. He noted that financial conditions in Japan remain accommodative, aligning with the BOJ’s forecasts for economic activity and price developments. The timing and pace of future rate adjustments will consider factors such as exchange rate movements, the impact of Artificial Intelligence (AI) demand, and geopolitical developments like the Middle East conflict. Policymakers are also set to discuss a potential revision to their assessment of underlying inflation at an upcoming meeting.