Bank of Japan Governor Kazuo Ueda stated that the central bank will continue to raise interest rates to curb inflation.
On October 17, Ueda held a press conference in Bangkok, Thailand, where the G20 finance ministers and central bank governors meeting took place. He noted that the core inflation rate is "generally close to 2%" and emphasized that any further increase is "unacceptable."
Ueda pointed out that despite last month's rate hike, accommodative conditions persist, stating, "We will continue to adjust the degree of accommodation through policy rate increases." He reiterated his vigilance regarding factors that could accelerate inflation, such as rising oil prices, increased demand related to artificial intelligence, and the depreciation of the yen.
Regarding the neutral interest rate, which neither stimulates nor constrains the economy, he remarked, "There is no clear evidence that we are near that level," adding that he wants to assess whether the cumulative effects of previous rate hikes are becoming apparent.
Last month, the Bank of Japan raised the short-term policy interest rate from approximately 1.0% to 1.25%, an increase of 0.25 percentage points.
The next monetary policy meeting is scheduled for October 29-30. Market forecasts suggest that rates will remain unchanged at this month's meeting, with attention turning to whether further rate hikes will occur at the December meeting, according to Nikkei.
Meanwhile, Erin Brown, the U.S. Treasury Deputy Secretary for International Affairs, expressed in an interview with Nikkei that Prime Minister Takaiichi's recent comments on "fiscal sustainability" would benefit Japan, stating, "We hold the Prime Minister and the Japanese government in high regard and have strong confidence in them."
Nikkei interpreted Brown's remarks as a sign that tensions with U.S. authorities, who have been concerned about Japan's accommodative monetary and fiscal policies, may be easing.
Last month, Treasury Secretary Yellen indicated during a press conference at the G20 finance ministers meeting that she had conveyed to Japan the need to halt its reflation policies. Additionally, President Donald Trump expressed concerns about the yen's depreciation during a recent U.S.-Japan summit with Prime Minister Takaiichi, applying pressure to end Japan's accommodative stance.
Brown clarified that Yellen's comments on reflation did not constitute a directive for the Bank of Japan's monetary policy, but noted, "Japan is the largest holder of U.S. Treasury securities, and we are monitoring the stability of the Japanese yen." Regarding the possibility of further joint intervention in the foreign exchange market if the yen weakens again, she stated, "We are reviewing all options and continuing close consultations with Japan."
* This article has been translated by AI.
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