Bank of Japan Governor Kazuo Ueda said the central bank is working to narrow its estimate of Japan’s neutral interest rate, the level neither stimulating nor restraining the economy, and will disclose its findings if the assessment becomes sufficiently precise. For now, he said policymakers still rely on a “fairly wide range,” underscoring the uncertainty around how far rates can ultimately be raised as the BOJ normalises policy.
Ueda stressed that current monetary conditions remain accommodative even after recent adjustments, suggesting further tightening remains possible but not pre-determined. He noted significant uncertainty about the eventual peak for interest rates, a key question for markets watching the BOJ’s gradual exit from ultra-loose policy.
He also said the government’s new economic package is likely to lift growth and could have mixed effects on inflation, potentially adding both upward and downward pressures depending on the components of the program.
