Bank of Japan Governor Kazuo Ueda stated on Monday that the central bank will continue raising interest rates if economic and price trends align with its forecasts.
Speaking to the country’s banking sector lobby, Ueda noted that Japan’s economy maintained a moderate recovery last year, despite the impact on corporate profits from higher U.S. tariffs, News.Az reports, citing Reuters.
“Wages and prices are highly likely to rise together moderately,” Ueda said, adding that adjusting the degree of monetary support will help the economy achieve sustained growth.
The BOJ raised its policy rate to a 30-year high of 0.75% from 0.5% last month, taking another landmark step in ending decades of huge monetary support and near-zero borrowing costs.
Despite the move, Japan’s real borrowing costs remain deeply negative with consumer inflation exceeding the BOJ’s 2% target for nearly four years.
Markets are focusing on the BOJ’s quarterly outlook report due at its policy meeting on January 22-23, for clues on how the board views the inflationary impact from recent yen falls.
The yen’s weakness has pushed up import costs and broader inflation, prompting some board members to call for further, steady rate hikes.
The dollar rose 0.2% to 157.08 yen on Monday after reaching 157.255 for the first time since December 22. Market expectations of further BOJ rate hikes have pushed up yields with those on the benchmark 10-year Japanese government bond (JGB) briefly hitting a 27-year high of 2.125% on Monday.
Speaking before the same banking lobby, Finance Minister Satsuki Katayama said Japan was at a critical stage of shifting to a growth-driven economy, from one mired in deflation.
News.Az
AloJapan.com