Ueda Reaffirms BOJ Rate Hike Expectations Amid Rising Inflation Concerns

BOJ Governor Kazuo Ueda has reinforced expectations of a policy rate increase in September by stating that upside inflation risks need closer attention. In remarks to reporters after the G20 finance ministers and central bank governors' meeting, Ueda said that as underlying inflation moves closer to 2%, it's essential to manage these risks more carefully.

The BOJ will fully discuss monetary policy at its September 17-18 meeting, where markets expect a rate hike. Overnight index swaps have already priced in this expectation, with no strong pushback from Ueda. The central bank's basic thinking on future monetary policy operations remains unchanged, according to Ueda.

The BOJ Governor also addressed the recent sharp rise in Japanese government bond yields, which reached 3% for the first time in 30 years. This increase is attributed to global rate moves rather than domestic concerns, according to Ueda and Finance Minister Satsuki Katayama.