BoJ’s Ueda: Central bank will continue to raise policy rates
On behalf of Bank of Japan (BoJ) Governor Kazuo Ued, Deputy Governor Shinichi Uchida said during the European trading session on Friday that the central bank will continue to raise policy rate in accordance with economic, price, and financial developments, reiterating the hawkish monetary policy sta
Deputy Governor Shinichi Uchida of the Bank of Japan (BoJ) stated during the European trading session on Friday that the central bank will continue to raise policy rates according to economic, price, and financial developments. The BoJ Governor Kazuo Ueda emphasized that stabilizing underlying inflation around the 2% target level is now more important than in the past.
He further explained that the pace and timing of future policy adjustments will depend on the likelihood of their baseline projections materializing along with the risks involved. Deputy Uchida acknowledged the risk of underlying inflation overshooting the 2% price target. Despite the September rate hike, accommodative financial conditions continue to support economic activity.
As of writing, the USD/JPY exchange rate was slightly down near 157.88. The speech was well-received, with an FXS Speechtracker score of 8.2 out of 10, significantly higher than Ueda's historical average of 7.3. The strong hawkish tone in the speech is seen as supportive for the Japanese Yen. The focus on continuing rate hikes while underlying inflation approaches and possibly overshoots 2%, combined with still-supportive financial conditions, signals a gradual but persistent normalization path.
This combination of rising inflation risks and supportive financial conditions underpins the expectation of further rate hikes, which should strengthen Yen demand and diminish the attractiveness of funding trades against the Yen.
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