Bank of Japan Governor: "No Prejudgment on Timing of Rate Hikes... Decision Made at Each Meeting"

Kazuo Ueda, Governor of the Bank of Japan (BOJ), reaffirmed on the 31st that "If the economic and inflation outlooks materialize, we will raise the policy interest rate accordingly." He drew a line on the specific timing of the rate hike, saying, "It cannot be predicted."

[Image source=Reuters Yonhap News]

Governor Ueda made these remarks at a press conference following the Monetary Policy Meeting held that day. The BOJ maintained the short-term policy interest rate, its benchmark rate, at 0.25% during the two-day meeting that ended on this day. After ending the negative interest rate policy by raising the benchmark rate in March, the BOJ took additional rate hikes at the July meeting. Since then, it has continued a freeze through last month and this month.

Regarding future monetary policy, Governor Ueda explained, "We will make judgments based on data obtained until each meeting is held." He also said that if economic and inflation indicators move as expected, additional rate hikes could be implemented, but he did not forecast a specific timing.

Local media, including the Nihon Keizai Shimbun, focused on the fact that Governor Ueda, during his recent visit to the United States, responded to questions about rate hikes by saying, "There is some time for now."

Governor Ueda also evaluated the global economy, including the U.S., when asked on the day, stating, "It was seen as a factor of downside volatility, but the fog is gradually clearing." However, he also pointed out that new risks could emerge depending on the policy direction of the next president after the U.S. presidential election in November.

Regarding the domestic economic situation in Japan, he assessed that "there are some weak movements," but "it is recovering moderately." On the depreciation of the yen in the foreign exchange market, he noted, "Compared to the past, it is easier to affect prices, so it is necessary to continue paying close attention to the situation."

The BOJ also released an update on its economic and inflation outlook on the day. The forecast for the consumer price index (excluding fresh food) inflation rate was 2.5% for 2024 (April 2024 to March 2025), unchanged from the previous forecast (July outlook). For 2025 (April 2025 to March 2026), it presented a downward revision of 0.2 percentage points to 1.9%. Additionally, real gross domestic product (GDP) growth is expected to be 0.6% in 2024 and 1.1% in 2025.