Bank of Japan (BoJ) Governor Kazuo Ueda emphasized a cautious and data-driven approach to monetary policy during comments made on Monday. Speaking about the central bank’s decision-making process, Ueda reiterated that the BoJ will assess available data and relevant factors at each policy meeting, avoiding a rigid timeline for adjustments.
Key Highlights
Policy Decisions: Ueda stressed that the BoJ will scrutinize multiple factors, including the U.S. economy, but won’t necessarily wait for complete clarity before making decisions.
Exchange Rate Impact: While declining to comment on short-term foreign exchange (FX) fluctuations, Ueda acknowledged that FX moves play a significant role in shaping economic and price forecasts.
Risks of Delayed Action: He warned that failing to appropriately adjust monetary support could lead to the need for rapid rate hikes in the future, as low real interest rates could push inflation above the 2% target.
Price and Consumption Dynamics: Ueda noted progress toward sustainably achieving the BoJ’s price target, citing developments in service prices. However, he acknowledged that a weak yen, while beneficial for exports and tourism, raises costs and negatively affects consumption.
Yen Carry Trades: Ueda commented that there has been no significant build-up of yen carry trade positions compared to July levels.
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