Ueda Vows to Keep Raising Rates Amid 'Accommodative' Financial Conditions

Bank of Japan Governor Kazuo Ueda reaffirmed his commitment to raising interest rates in the coming months, citing still-accommodative financial conditions. Speaking at a news conference after attending the G20 finance leaders' gathering, Ueda stated that he hopes to discuss with the board this month whether the likelihood of the BOJ's economic scenario materialising is heightening and whether upside price risks are increasing.

Ueda acknowledged that recent data suggests economic and price conditions are moving roughly in line with its projections, but emphasized that the central bank must pay particular attention to inflationary risks. He mentioned key factors such as the Middle East conflict, robust AI-related demand, and the boost to inflation from a weak yen.

Ueda declined to comment on whether markets have already fully priced in the chance of a rate hike at the upcoming policy meeting on September 17-18. The BOJ raised interest rates to a 31-year high of 1% in June, and Ueda's comments suggest that further increases may be necessary to combat inflation.

Ueda confirmed a meeting with US Treasury Secretary Scott Bessent, who called for 'decisive' monetary steps to combat the weak yen. The BOJ's basic approach on monetary policy remains unchanged, but Ueda signaled that the central bank is closely monitoring economic and price conditions.