More comments from Bank of Japan Governor Kazuo Ueda underscored the central bank’s readiness to manage bond markets flexibly while maintaining a view that inflation dynamics are evolving in line with economic fundamentals. Ueda said long-term interest rates are primarily shaped by market expectations for future short-term rates and shifts in term premiums. He added that if long-term yields were to rise in a way “out of step” with normal market behaviour, the BOJ stands prepared to respond, including through increased bond purchases.
On inflation, Ueda distinguished between short- and long-term drivers, noting that near-term price trends are largely determined by supply–demand conditions in the broader economy. Over a longer horizon, monetary factors — including the stance of policy — play a more meaningful role in shaping inflation through their influence on demand. His remarks reinforce the BOJ’s ongoing balancing act: allowing markets more latitude while signalling it will intervene if volatility threatens orderly conditions.
Earlier:
