The Bank of Japan raised its policy rate to 1.25%. At a press conference, Governor Ueda (植田) said that “the policy phase has changed” and reiterated the Bank’s intention to continue steering policy so as not to cool the economy.
The Bank of Japan decided the previous day to raise its policy rate to 1.25%. The Bank explained that prices had entered a phase in which they could rise more than expected, with the aim of overcoming the prolonged period of price stagnation.
At a press conference, Governor Ueda Kazuo (植田 和男) said that “the aim of monetary policy is to anchor Japan’s underlying inflation around 2%,” emphasizing that the policy phase had changed. In response, the market accelerated yen selling, increasing attention to interest rate trends in Japan and the United States.
Regarding the pace of future rate hikes, the Governor said there was no specific pace in mind, signaling a cautious stance on the speed of rate increases. As the Bank of Japan reaches a level not seen in 31 years, it is becoming more difficult to assess the appropriate level and pace.
The policy decision comes at a difficult juncture, with the need to contain an economic deterioration while maintaining price stability. Careful policy management is expected to continue as the Bank assesses market and price trends.