BOJ Governor Ueda Cites Low Real Rates in Policy Decision-Making
Bank of Japan Governor Kazuo Ueda stated that the central bank must consider Japan's currently low real interest rates when determining the timing for future interest rate hikes. Speaking at a press conference in Washington following the International Monetary Fund (IMF) meetings, Ueda highlighted that Japan is grappling with rising inflation driven by a negative supply shock. He explained that this type of inflation is more challenging to control through monetary policy compared to demand-driven inflation. While acknowledging that optimal responses to such shocks vary by country, Ueda emphasized that Japan's financial environment remains accommodative. He noted that real interest rates are low across the medium-term zone of the yield curve. Consequently, the BOJ needs to carefully balance these factors in its policy settings. The comments provide insight into the central bank's cautious approach to normalizing monetary policy amidst complex economic conditions, signaling that any moves to raise rates will be data-dependent and mindful of the broader financial landscape.
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BOJ Governor Ueda Cites Low Real Rates in Policy Decision-Making
Bank of Japan Governor Kazuo Ueda stated that the central bank must consider Japan's currently low real interest rates when determining the timing for future interest rate hikes. Speaking at a press conference in Washington following the International Monetary Fund (IMF) meetings, Ueda highlighted that Japan is grappling with rising inflation driven by a negative supply shock. He explained that this type of inflation is more challenging to control through monetary policy compared to demand-driven inflation. While acknowledging that optimal responses to such shocks vary by country, Ueda emphasized that Japan's financial environment remains accommodative. He noted that real interest rates are low across the medium-term zone of the yield curve. Consequently, the BOJ needs to carefully balance these factors in its policy settings. The comments provide insight into the central bank's cautious approach to normalizing monetary policy amidst complex economic conditions, signaling that any moves to raise rates will be data-dependent and mindful of the broader financial landscape.
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