BOJ Governor Ueda Warns of Inflation Risks Focuses on Anchoring 2% Target
Bank of Japan Governor Kazuo Ueda emphasized the need to anchor underlying inflation around the central bank's 2% target, indicating a willingness to continue raising interest rates if necessary. Speaking at an annual meeting of securities firms, Ueda noted that economic and price developments are aligning with the BOJ's baseline scenario, with moderate economic recovery and rising long-term inflation expectations.
Ueda warned of potential risks, including inflation overshooting the target due to price pressures from the US-Israeli war on Iran, strong AI-related demand, and the weak yen. He assured that financial conditions remain accommodative, supporting economic activity even after the recent rate hike, and reiterated the BOJ's commitment to adjusting monetary support by raising borrowing costs.
The governor stressed that ensuring underlying inflation remains anchored around 2% is crucial to prevent an inflation overshoot that could harm the economy.