Bank of Japan Governor Kazuo Ueda said underlying inflation is near the 2% target, and argued that keeping core inflation anchored around that level is a priority. He linked price dynamics to a “positive loop” of rising wages and recovering prices, while pointing to the Middle East conflict as a source of higher energy and other supply-driven pressures. Ueda also cited robust global demand lifting domestic capital expenditure and exports, plus Japan’s steady recovery and tight labour market, as factors supporting demand-led inflation.
Inflation Dynamics and Economic Drivers
Bank of Japan Governor Kazuo Ueda said underlying inflation is near the 2% target, and argued that keeping core inflation anchored around that level is a priority. He linked price dynamics to a “positive loop” of rising wages and recovering prices, while pointing to the Middle East conflict as a source of higher energy and other supply-driven pressures. Ueda also cited robust global demand lifting domestic capital expenditure and exports, plus Japan’s steady recovery and tight labour market, as factors supporting demand-led inflation.
Policy Operations and Market Response
On policy operations, Ueda said there is no change to the central bank’s fundamental bond taper approach and he declined to preannounce the timing of emergency bond market measures. The BoJ will monitor market conditions, including the pace of long-term rate rises and any signs of instability, when deciding on intervention. He said that if the bank raises the short-term policy rate, long-term interest rates would likely rise steadily, while financial conditions remain accommodative; miscalibration could instead trigger market inflation concerns that push yields higher. USD/JPY was down 0.13% at 157.80.
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