Shafaqna English– Bank of Japan Governor Kazuo Ueda reaffirmed his commitment to further interest rate hikes in order to normalize the country’s still-loose monetary policy, while signaling that the central bank will debate upside inflation risks at its upcoming policy meeting this month—keeping the door open for a potential rate increase in September.
Speaking after the G20 finance leaders’ gathering, Ueda emphasized that while financial conditions remain accommodative, the BOJ has already raised rates five times and must carefully assess the cumulative economic impact before acting further.
He noted that recent data broadly align with the BOJ’s July quarterly projections and that underlying inflation is nearing the 2% target, warranting close attention to inflationary pressures. Key upside risks he highlighted include geopolitical tensions in the Middle East, robust AI-related demand, and the inflationary effect of a weak yen.
Ueda’s remarks followed a meeting with U.S. Treasury Secretary Scott Bessent, who had publicly called for “decisive” monetary action to counter the yen’s weakness—bolstering market expectations for a hike at the September 17–18 meeting.
Although Ueda declined to comment on the Bessent meeting or on market pricing, recent hawkish signals from the BOJ and repeated U.S. pressure have led markets to nearly fully price in a rate hike this month, which would follow June’s increase to 1%—the highest level in 31 years—and July’s hold.
Source: Reuters