BOJ chief signals chance of September rate hike, debate on price risks
The BOJ raised interest rates to a 31-year high of 1 per cent in June
The Bank of Japan's governor, Kazuo Ueda, indicated a strong likelihood of a rate hike in September during a recent news conference, following discussions with the US Treasury Secretary Scott Bessent. Ueda emphasized the need to consider inflationary risks and upside price risks while debating potential policy changes. The BOJ had previously raised interest rates to a 31-year high of 1% in June, primarily due to concerns over economic conditions and the impact of geopolitical events on inflation.
Japan's 10-year bond yield reached 3% for the first time since 1996, reflecting the market's anticipation of a rate hike. The BOJ's hawkish stance, highlighted by BOJ board member Hajime Takata's remarks, contributed to this increase in yields. Ueda specified that the central bank would continue raising interest rates if financial conditions remained accommodative but would closely assess the cumulative impact on the economy.
He also mentioned that the BOJ's policy approach would remain unchanged, given that inflation remains close to the 2% target.
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