BoJ Governor Kazuo Ueda reaffirmed today that Japan’s economy is expected to sustain a moderate recovery, which should support underlying inflation in converging toward 2% target over the coming years. However, Ueda did not repeat the usual pledge to continue raising interest rates if inflation moves in line with forecasts, signaling a shift in tone towards a more cautious approach.
Ueda highlighted the ongoing uncertainties surrounding Japan’s economy and inflation, stating that “uncertainty regarding Japan’s economy and prices remain high.” He also pointed to external risks, noting that the outlook for overseas economies, including the US, remains unclear, while financial markets continue to show signs of instability.
Given these risks, Ueda emphasized the need for “extremely high vigilance” in assessing economic developments. For now, BoJ will maintain a cautious stance, closely scrutinizing both domestic and global factors before tightening monetary policy again.
