BOJ governor sees more inflation

Bank of Japan Governor Kazuo Ueda said the economy is making progress toward achieving sustainable wage-driven inflation, without giving any indications on whether the central bank could raise interest rates again next month.

Ueda reiterated the BOJ’s willingness to continue raising borrowing costs if the economy behaves in line with its expectations, but warned of the need to scrutinize external risks such as uncertainty over the U.S. outlook and still-tense financial markets.

Ueda said in a speech Monday that the BOJ’s monetary policy committee will carefully consider the impact of foreign exchange fluctuations on the economy, price expectations and risks at each policy meeting, while declining to comment on short-term moves in the currency market.

Ueda noted, however, that rising inflationary pressures due to a weaker yen were among the factors that led to the July 2024 rate hike, making future yen moves pivotal in determining the pace of rate hikes going forward.