Bank of Japan Governor Kazuo Ueda stated he "can’t tolerate" underlying inflation rising further above 2%, emphasizing that inflation is already roughly around the target and must not exceed it. Speaking after international meetings in Bangkok, Ueda said the policy phase has shifted toward ensuring inflation settles at around 2% as a key objective. His comments reflect growing caution over inflation, suggesting the need for the BOJ to raise borrowing costs at a pace that prevents falling behind the curve.
Despite market expectations of a pause, Ueda signaled openness to future rate hikes if needed. Earlier in the week, Bloomberg reported BOJ officials were leaning against a second consecutive rate hike later this month but kept December as a possibility. The BOJ raised rates in September for the second time in three months, marking its fastest tightening pace since 1990.
Ueda said discussions with global counterparts did not contradict the BOJ’s current assessment and noted he would discuss with board members whether to adjust language on inflation nearing the 2% target. Board member Junko Koeda warned against excessive caution on rate hikes, also hinting at future moves. Overnight swaps show less than 5% chance of a hike this month, rising to about 75% by December.
About a third of economists expect a December move, while over half predict the BOJ will wait until January.
Source: Bloomberg Markets · Summarized by HeadlinesBriefing