Bank of Japan’s governor Ueda reiterates risk of inflation exceeding 2% target, signals further rate hikes

[TOKYO] The Bank of Japan (BOJ) sees the risk of inflation exceeding its 2 per cent target and will conduct additional interest-rate hikes appropriately, governor Kazuo Ueda said in speech on Wednesday (Jun 24) that reiterated policymakers’ recent messaging.

“With underlying inflation moving towards 2 per cent and financial conditions remaining accommodative, we expect to continue increasing the interest rate and adjusting the degree of monetary accommodation in response to economic activity, prices and financial conditions,” Ueda said in remarks delivered by deputy governor Ryozo Himino.

Ueda only returned to work on Tuesday after being hospitalised for treatment of a liver cyst infection.

The timing and pace of those adjustments will depend on the impact of the war in Iran, among other factors, Ueda said.

The comments were in line with what the BOJ communicated at its policy meeting last week, when Ueda was also absent. Policymakers voted 7-1 to raise the benchmark rate to 1 per cent, the highest since 1995. Officials signalled the need for further increases in a summary of opinions released on Wednesday.

The widely expected rate hike did little to support the yen, which is hovering near its weakest level in nearly 40 years. Currency traders have been on alert for any catalyst that may tip authorities to intervene in the market. BLOOMBERG