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BoJ’s Ueda: Appropriate to raise rates if trend inflation heightens in line with our forecast

Bank of Japan Governor Kazuo Ueda said during his scheduled appearance on Tuesday that it is “appropriate to raise rates if trend inflation heightens in line with our forecast.”

Additional comments

Japan's real interest rate remains deeply negative, stimulating economy and working to push up prices.

If trend inflation moves to around 2%, it is desirable to move our policy rate to near levels seen neutral to economy, prices.

We will raise interest rate if economy, prices move in line with forecasts shown in our quarterly outlook report.

Uncertainty surrounding economy, prices are high.

BoJ must conduct monetary policy in timely, appropriate fashion without having a pre-set schedule, taking into account various uncertainties.

We will watch with strong sense of urgency US and overseas economic outlook, still unstable market developments.

One-sided Yen falls have been reversed since August, rise in import prices moderating.

We can afford to spend time scrutinising market moves and overseas developments behind market developments.

It is also clear persistent, accelerating inflation also have negative impact on economy.

Will release findings of comprehensive review by year-end.

Expect elevated corporate profits to lead to increase in capex.

Consumption likely to increase moderately as household income rises.

Developments regarding the US economy remain uncertain including how past Fed rate hikes could affect labor market.

Prices are rising by around 2% for wide range of goods.

Looking closely at service price moves, it is becoming more clear that impact of wage rises is heightening.

Trend inflation likely to gradually heighten toward 2%.

Change in corporate price, wage-setting behaviour likely to become embedded in society, keep inflation on the rise next fiscal year and beyond.

Must scrutinize whether overseas developments could affect japan's corporate profits, behaviour.

Market reaction

USD/JPY is recapturing 144.00 despite the hawkish comments from the BoJ Chief. The pair is up 0.31% on the day, as of writing.

Japanese Yen PRICE Today

The table below shows the percentage change of Japanese Yen (JPY) against listed major currencies today. Japanese Yen was the weakest against the Australian Dollar.

 USDEURGBPJPYCADAUDNZDCHF
USD -0.05%-0.12%0.26%-0.21%-0.40%-0.16%-0.03%
EUR0.05% -0.07%0.32%-0.20%-0.36%-0.13%0.01%
GBP0.12%0.07% 0.38%-0.10%-0.28%-0.06%0.10%
JPY-0.26%-0.32%-0.38% -0.45%-0.67%-0.46%-0.29%
CAD0.21%0.20%0.10%0.45% -0.19%0.04%0.19%
AUD0.40%0.36%0.28%0.67%0.19% 0.24%0.40%
NZD0.16%0.13%0.06%0.46%-0.04%-0.24% 0.16%
CHF0.03%-0.01%-0.10%0.29%-0.19%-0.40%-0.16% 

The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Japanese Yen from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent JPY (base)/USD (quote).

Author

Dhwani Mehta

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.

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