Yomiuri "Interest Rates Maintained at Meeting on 25th-26th"
Amid a sustained rise in inflation due to the weakest yen in 34 years, Kazuo Ueda, Governor of the Bank of Japan (BOJ), stated, "If inflation, economic outlook, and risks change, I believe policy adjustments could be considered."
According to Asahi News Network (ANN) on the 23rd, Governor Ueda said at the House of Councillors' Finance and Financial Affairs Committee that if the possibility of achieving the 2% inflation target continuously and stably increases, the BOJ would raise short-term interest rates.
However, regarding the timing of the rate hike, he said, "We have not yet decided specifically when or by how much to raise rates."
The prevailing view in Japan is that the BOJ is likely to maintain current interest rates at the Monetary Policy Meeting scheduled for the 25th and 26th. On the same day, the Yomiuri Shimbun reported that the BOJ is expected to keep rates unchanged at this meeting. It also conveyed that the financial market anticipates considering additional rate hikes after summer.
This meeting comes one month after the BOJ raised rates for the first time in about 17 years and ended negative interest rates for the first time in 8 years last month.
However, the newspaper reported that the BOJ is considering revising upward the inflation forecast in the economic outlook report to be released at this Monetary Policy Meeting. This is due to recent oil price increases and yen depreciation acting as factors driving inflation.
In the economic outlook report announced in January, the Bank of Japan projected the consumer price inflation rate (excluding fresh food) for fiscal year 2024 (April 2024 to March 2025) at 2.4%, and for fiscal year 2025 at 1.8%. The real GDP growth rate was forecasted at 1.2% for 2024 and 1.0% for 2025.
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