- But it does warrant attention
- We lack enough data to determine next year's wage outlook
- It depends on how US economic developments affect Japan's corporate profits
- The uncertainty on how US tariffs will affect the global economy remains quite high
- It would be too late to wait until all hard data becomes available
- So we will scrutinise as much data as needed to make our policy decision
- That includes not only hard data but also corporate surveys
- Risk of delay in US data from govt shutdown is serious but we can extract information from other similar data
He's offering up a bit of something for everyone but at the balance, it doesn't seem like he's pushing all too hard for a rate hike at the end of this month. And that's arguably the main takeaway here. That especially since Ueda keeps harping on needing to scrutinise the impact of US tariffs still, in saying that they don't know what to make of the situation yet.
------------------------------------------------
The News for Newbies: BOJ’s Ueda Plays Down Inflation Risk
We explain the markets in everyday language. Real news shows the terms, the trends, the connections.
What happened
Ueda said Japan is unlikely to be “behind the curve” on inflation. That means the BOJ believes prices are not rising out of control. The bank has kept interest rates near zero even as other central banks raised them. Traders now see less urgency for Japanese yields to rise.
What this can move
If the BOJ stays cautious, the yen often weakens against the dollar. A weaker yen can lift Japanese exports but makes imports more expensive. If yields in Japan stay low while U.S. yields fall, the USDJPY exchange rate could swing sharply.
Concepts in plain English
Behind the curve: When a central bank reacts too late to inflation, letting prices rise too fast.
Yield: The return investors earn on a bond. If yields are low, borrowing is cheap.
USDJPY: The currency pair showing how many yen one U.S. dollar can buy.
Monetary policy: Actions by a central bank to control money supply, mainly through interest rates.
Tightening: Raising rates or reducing money in circulation to slow inflation.
Market connections
If BOJ keeps policy loose, then yen usually weakens because investors seek higher returns elsewhere.
If Japanese yields stay low, then U.S. yields become the main driver of USDJPY.
If inflation picks up faster than BOJ expects, then policy tightening could shock markets.
Caveat: Global risk events can push investors into yen as a safe haven, even if yields are low.
Quick answers for new investors and traders
Why is the Japanese yen important?
The yen is one of the most traded currencies in the world. It is a global safe haven and a benchmark in carry trades, where investors borrow yen cheaply to invest in higher yielding assets.
What does “behind the curve” mean for central banks?
It means a bank reacted too slowly to inflation. If that happens, it may need sharper rate hikes later.
Why do traders watch USDJPY so closely?
Because it links two major economies. The pair reflects not only currency flows but also differences in U.S. and Japanese interest rates.
Does a weaker yen always hurt Japan?
No. It helps exporters like carmakers but hurts households that pay more for imports like oil or food.
Why do yields matter for currencies?
Higher yields attract investors looking for returns. Lower yields drive them away.
