BOJ will raise rates if trend inflation accelerates, says Gov Ueda
Bank of Japan Governor Kazuo Ueda stated on Tuesday that should there be an acceleration in trend inflation towards the 2% target, which aligns with the central bank's projection, the bank will proceed to increase interest rates once more.
Ueda informed the parliament that altering monetary policy would be warranted if there were revisions to our price projections. However, we do not possess any predetermined notions regarding the precise timing and speed of interest rate increases.
He further expressed the view that the BOJ should continue to uphold an extremely accommodative monetary policy, citing the fact that trend inflation, which encompasses price increases propelled by domestic demand and assessed through the examination of diverse indicators, still lingers "slightly below 2%."
"Ueda stated during a seminar in Washington last week that we will adopt a cautious approach, first evaluating the effects of our recent policy changes on the economy and inflation, and subsequently deliberating on additional modifications as deemed suitable."
According to sources, it is anticipated that the BOJ will forecast a sustained inflation rate of approximately 2% for fiscal year 2026. Based on the current projections, the BOJ predicts that inflation will reach 1.9% in fiscal years 2024 and 2025. The BOJ will unveil its estimates for 2026 for the first time this Friday.
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