BOJ chief calls for more focus on anchoring inflation around target

Tokyo, October 6 - Bank of Japan Governor Kazuo Ueda emphasized the growing importance of anchoring underlying inflation around the central bank's 2 percent target during a speech at an annual meeting of securities firms. Ueda indicated the Bank's readiness to raise interest rates to mitigate the risk of excessive inflation. The economic and price developments were in line with the BOJ's baseline scenario, with a moderate economic recovery and rising long-term inflation expectations, he stated.

However, Ueda warned of the potential for underlying inflation to exceed the bank's target due to price pressures stemming from the US-Israeli conflict with Iran, robust demand driven by artificial intelligence, and a weak Japanese yen. Despite last month's rate hike, financial conditions remained accommodative and continue to support economic activity, Ueda said, emphasizing that the central bank would persist in raising borrowing costs to fine-tune the level of monetary support.

Ueda highlighted the heightened need to ensure underlying inflation remains anchored at 2 percent, thus preventing an inflation overshoot from damaging the economy.