Bank of Japan Governor Ueda signals potential interest rate hikes

Bank of Japan (BOJ) Governor Kazuo Ueda has signaled that the central bank may continue to raise interest rates to ensure underlying inflation remains anchored around the 2% target. Ueda noted that economic developments and price movements are generally aligning with the bank’s baseline forecasts, with a moderate economic recovery underway.

Ueda highlighted several risks that could push inflation above the target, including rising raw material costs, strong demand driven by artificial intelligence, and a weak yen. He also cited geopolitical tensions, specifically the conflict involving the US, Israel, and Iran, as a potential factor.

While financial conditions remain accommodative following the previous rate hike, the BOJ intends to adjust borrowing costs to manage economic support. Market expectations suggest a significant possibility of another rate hike by December, though the timing and pace of future adjustments will depend on whether the bank's projections materialize.