BOJ’s Ueda vows to keep raising rates, eyes inflation risks

Bank of Japan Governor Kazuo Ueda indicated on Tuesday that a rate hike is likely on the table when the central bank's board convenes on September 17-18, saying policymakers must pay closer attention to upside inflation risks as underlying price growth approaches the BOJ's 2% target.

Ueda's Comments at G20

Speaking at a press conference following the G20 finance ministers and central bankers gathering in Asheville, North Carolina, Ueda said the BOJ would continue raising interest rates as financial conditions remain accommodative. He noted that data released since the BOJ's July meeting suggest economic and price conditions have moved roughly in line with the bank's projections.reuters+2

"From the perspective of conducting policy with a risk-management approach as the underlying inflation rate approaches 2%, we have come to believe that we need to pay greater attention than before to upside risks in our policy conduct," Ueda said.japantimes

At the same time, Ueda struck a cautious note, acknowledging the need to assess the effects of prior tightening. "We have raised our policy rate five times so far, so we need to carefully scrutinize how the cumulative impact of the moves could affect the economy," he said.marketscreener+1

Market Expectations Mount

Ueda declined to comment when asked about markets near fully pricing in a rate hike at the September meeting. The yen strengthened following his remarks, which were widely interpreted as the clearest signal yet that the BOJ is prepared to act this month. The Japan Times News Corp ↘ 2.36% reported that Ueda appeared at a joint press briefing with Finance Minister Satsuki Katayama.channelnewsasia+2

What Comes Next

The September 17-18 meeting will be closely watched as a test of whether the BOJ is prepared to tighten further despite global economic uncertainty. Ueda framed the upcoming discussion as part of the bank's standard process but left little doubt about the direction of travel. "We will scrutinize whether the economy and prices are moving in line with our baseline scenario, as well as risks," he said. "We will debate these factors thoroughly, including at our next policy meeting."finance.yahoo