BOJ chief calls for more focus on anchoring inflation around target

Tokyo, October 6 - Bank of Japan Governor Kazuo Ueda emphasized on Tuesday the growing importance of anchoring underlying inflation around the central bank's 2% target, indicating readiness to maintain rate hikes to mitigate the risk of excessive inflation. Ueda stated that economic and price developments were in line with the BOJ's baseline scenario, with a moderate economy and rising long-term inflation expectations.

He cautioned about the potential for underlying inflation to exceed the target due to price pressures stemming from the US-Israeli conflict with Iran, robust AI-related demand, and the weakened yen. Ueda noted that financial conditions remain accommodative, continuing to bolster economic activity even after the recent rate increase.

He reiterated that the central bank will persist in raising borrowing costs to fine-tune monetary support levels. Ueda stressed that ensuring underlying inflation is anchored around 2% is crucial to prevent an inflation overshoot and safeguard the economy.