BOJ Governor Ueda Wants Inflation Anchored Around 2% Target

Bank of Japan Governor Kazuo Ueda emphasized the need to anchor inflation around the central bank's 2% target, signaling a commitment to further interest rate hikes if necessary. In a speech to securities firms on Tuesday, Ueda noted that economic and price trends align with the BOJ's baseline scenario, with a moderate recovery in the economy and rising long-term inflation expectations.

Ueda warned of potential risks, including inflation overshooting the target due to geopolitical tensions, such as the US-Israeli war on Iran, strong demand driven by AI, and the weak yen. Despite last month's rate hike, he noted that financial conditions remain accommodative and continue to support economic activity.

The governor stressed that adjusting monetary support through higher borrowing costs is crucial to prevent inflation from spiraling out of control and harming the economy. He reiterated that ensuring underlying inflation stays anchored around 2% is a top priority.