Summary:
Ueda says wage–price mechanism likely to be sustained
BOJ to keep raising rates if economy and prices track forecasts
Normalisation framed as smoothing achievement of inflation target
Message aligns with gradual, data-dependent tightening path
Market impact modest; focus remains on timing and pace
Ueda sticks to the script: sustained wage–price cycle and further BOJ hikes if forecasts hold:
- The comments reinforce expectations of gradual BOJ tightening, offering modest yen support at the margin, but likely won’t shift pricing without fresh evidence on wages, inflation or the policy timeline.
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Kazuo Ueda reiterated the Bank of Japan’s core message that Japan is moving toward a more durable inflation regime, with a mechanism in place for wages and prices to rise moderately “in tandem” and remain sustained.
In fresh remarks, Ueda said the BOJ expects to continue raising interest rates if the economy and prices develop broadly in line with the bank’s forecasts. The guidance keeps the focus on a gradual normalisation path rather than a rapid tightening cycle, and underscores that further moves remain conditional on incoming data confirming a stable, demand-driven inflation backdrop.
Ueda also argued that adjusting the degree of monetary support will help Japan achieve the BOJ’s price target smoothly and contribute to sustained growth. The framing is consistent with the BOJ’s attempt to balance two objectives: removing extraordinary stimulus without undermining the wage–price momentum it believes is now taking hold, and managing the transition in a way that minimises market volatility.
For markets, the remarks are broadly “as expected” — reinforcing the idea that the BOJ sees the wage-price cycle as durable enough to justify continued policy adjustment, but not so overheated that it demands urgency. In FX terms, that tends to support the yen at the margin by keeping normalisation on the table, though the currency’s direction still hinges heavily on global rate differentials and domestic politics. In rates, it validates the market’s focus on the pace and timing of further hikes rather than questioning the direction of travel.
