Governor Kazuo Ueda said on Tuesday the bank will keep raising rates so underlying inflation does not overshoot 2 percent, ahead of the October 29-30 meeting.
Bank of Japan Governor Kazuo Ueda said on Tuesday it has become more important to anchor underlying inflation around the 2 percent target, signalling that the bank is ready to keep raising interest rates. The comments came before the policy meeting that ends on October 30, when new quarterly forecasts are due.
Ueda said the economy and prices are broadly in line with the bank's forecasts, with a moderate recovery and solid business sentiment in the tankan survey. He said rising raw-material costs are lifting wholesale prices and spreading into consumer inflation, and that long-term inflation expectations are still rising.
He warned that underlying inflation could overshoot 2 percent because of price pressure from the US-Israeli war on Iran, strong demand tied to artificial intelligence, and a weak yen. Financial conditions remain accommodative after last month's rate increase and still support activity, he said.
The September statement had said only that it was important to anchor inflation around the target. Tuesday's wording, Reuters noted, was stronger. The bank raised its key rate last month to a 31-year high.
Separate sources told Reuters that many officials are cautious about another hike at the October meeting and want more data on how earlier increases have affected domestic conditions. No decision was announced with Ueda's remarks.
People Sentiments Neutral
- Kazuo Ueda said it has become more important to anchor underlying inflation around 2 percent.