Bank of Japan Governor: "There is Time... Additional Interest Rate Hikes Will Be Considered Carefully"

Kazuo Ueda, Governor of the Bank of Japan (BOJ), reaffirmed on the 24th his cautious stance of not rushing additional interest rate hikes.

[Image source=Reuters Yonhap News]

According to the Nihon Keizai Shimbun and others, Governor Ueda stated in a speech at a joint meeting hosted by four economic organizations in Osaka City that "When making policy decisions, we must carefully evaluate factors such as the conditions of the financial and capital markets and the underlying overseas economic situation," adding, "We have sufficient time to do so."

He noted that there is significant uncertainty surrounding the economy and inflation, saying, "Unexpected situations often arise." He also emphasized that monetary policy operations are "not based on a predetermined schedule."

These remarks are consistent with the context of the press conference held immediately after last week's Monetary Policy Meeting. At that time, the BOJ kept policy rates unchanged as the market expected and signaled caution regarding further hikes. Currently, the market consensus is that since the BOJ has already raised rates twice this year, it will likely maintain the current rate level until December or January of next year.

However, Governor Ueda also reaffirmed his position that if the economy and inflation trends move as the BOJ forecasts, the policy rate will be raised. He assessed that the inflation trend is "gradually rising toward the 2% target." Furthermore, he mentioned that they will closely monitor whether the increase in labor costs due to corporate wage hikes is passed on to product prices.