BoJ's Ueda: Will keep adjusting degree of easing if our economic, price outlook is to be realised
Bank of Japan (BoJ) Governor Kazuo speaks at the post-policy meeting press conference on Wednesday, explaining the Bank’s decision to keep the interest rate steady at 0.50%.
Additional quotes
Japan's economy is recovering moderately, although some weak moves are seen.
Uncertainties surrounding Japan's economy and prices, including global trade policy trends, remain high.
Must pay due attention to FX markets, their impact on Japan's economy, and prices.
FX impact on prices has become larger than in past, as firms are more eager to wage, price hikes.
Will keep adjusting degree of easing if our economic, price outlook is to be realised.
Will guide policy from the standpoint of sustainably, stably achieving price target.
This Shunto result largely in line with our January view.
Must scrutinise wage trends.
Strong momentum of wage hikes spreading to smaller companies.
Need to carefully monitor developments in wages.
Aware that rising prices are having a negative impact on households.
Need to be aware that rising food prices including rice could change households' inflation expectations.
US tariff policy, targets have expanded in the past month rapidly.
Will keep scrutinising impact of the US trade policy on us, global, Japan's economy.
There are still large uncertainties in the US tariff policy.
Underlying inflation is gradually nearing 2%, and that has allowed us to gradually adjust the degree of monetary easing.
The BoJ has shrunk its JGB buying as planned.
Still need some time to consider what to do with BoJ’s ETF holdings.
Basic stance has been to proceed with tapering as planned but will adjust as needed.
Will make decision as we look at domestic price, wage trends and overseas uncertainties.
Overseas uncertinties rapidly increasing.
Not in stage of quantitiatively eavualute overseas uncertainties.
Wage trends 'on track' or slightly stronger.
Looking at various indicators to determine underlying inflation.
Underlying inflation between 1% and 2%.
Uncertainties regarding overseas economies are rising compared with Jan.
Still haven't narrowed down what the neutral rate is.
Still our view on neutral rate has wide range.
There are various views on neutral rates if economy grows in line with projection.
Tariffs could affect mind, confidence of businesses, households also.
Don't know how tariff effects on economy in the short term.
Want to conduct policies before it is too late when asked about tariff impacts.
Markets set long-term rates.
Will respond nimbly if there is abnormal long-term yield moves.
Not in such situation now.
Market reaction
USD/JPY remains strongly bid following these comments. The pair was last seen trading 0.27% higher on the day near 149.75.
Bank of Japan FAQs
The Bank of Japan (BoJ) is the Japanese central bank, which sets monetary policy in the country. Its mandate is to issue banknotes and carry out currency and monetary control to ensure price stability, which means an inflation target of around 2%.
The Bank of Japan embarked in an ultra-loose monetary policy in 2013 in order to stimulate the economy and fuel inflation amid a low-inflationary environment. The bank’s policy is based on Quantitative and Qualitative Easing (QQE), or printing notes to buy assets such as government or corporate bonds to provide liquidity. In 2016, the bank doubled down on its strategy and further loosened policy by first introducing negative interest rates and then directly controlling the yield of its 10-year government bonds. In March 2024, the BoJ lifted interest rates, effectively retreating from the ultra-loose monetary policy stance.
The Bank’s massive stimulus caused the Yen to depreciate against its main currency peers. This process exacerbated in 2022 and 2023 due to an increasing policy divergence between the Bank of Japan and other main central banks, which opted to increase interest rates sharply to fight decades-high levels of inflation. The BoJ’s policy led to a widening differential with other currencies, dragging down the value of the Yen. This trend partly reversed in 2024, when the BoJ decided to abandon its ultra-loose policy stance.
A weaker Yen and the spike in global energy prices led to an increase in Japanese inflation, which exceeded the BoJ’s 2% target. The prospect of rising salaries in the country – a key element fuelling inflation – also contributed to the move.
Author
Dhwani Mehta
FXStreet
Residing in Mumbai (India), Dhwani is a Senior Analyst and Manager of the Asian session at FXStreet. She has over 10 years of experience in analyzing and covering the global financial markets, with specialization in Forex and commodities markets.
