BOJ Governor Ueda Kazuo (植田 和男) spoke in Tokyo on 6 October. Financial conditions remain accommodative even after the September rate hike, and with upside risks to prices increasing, the BOJ indicated that it is considering another rate hike. Markets are focused on the late-October meeting.
BOJ Governor Ueda Kazuo (植田 和男) said that financial conditions remain accommodative and are not restraining economic activity, even after the policy rate was raised to 1.25% in September. While saying that underlying inflation is expected to approach 2%, he expressed increased concern over rising upside risks to prices.
In his speech, he pointed to escalating tensions in the Middle East, expanding AI demand and the weakening yen as potential factors that could push up prices. The BOJ indicated that it would consider another rate hike to ensure that inflation remains stably at 2%.
At its September Monetary Policy Meeting, the BOJ raised the rate from 1.0% to 1.25%. The hike came only 3 months after the previous one, and the pace going forward is a key focus for the market. The next meeting is scheduled for 29–30 October.
Some market participants say the possibility of another rate hike before year-end has increased, although the extent of any acceleration remains uncertain depending on external developments. The BOJ is expected to proceed with policy normalisation while remaining alert to the transmission of external shocks.