BOJ’s Ueda says rates will rise if outlook strengthens, inflation to re-accelerate

Ueda keeps tightening bias intact, flags further hikes if outlook firms.

Summary:

• Ueda reiterates conditional tightening bias

• Rates to rise if outlook materialises

• Underlying inflation still below 2%

• Policy aimed at preventing overshoot

• BoJ says not “behind the curve”

• Inflation expected to re-accelerate

• No change to January projections

Bank of Japan Governor Kazuo Ueda reaffirmed the central bank’s tightening bias, signalling that further interest rate increases remain on the table if economic and price forecasts strengthen.

In comments reported by Yomiuri, Ueda said the BoJ’s “basic stance” is to continue raising rates should the likelihood of its growth and inflation projections materialising heighten. The remarks reinforce the conditional nature of the Bank’s normalisation process: policy will tighten further if incoming data support its baseline outlook.

Ueda acknowledged that underlying inflation, the Bank’s preferred gauge of sustainable, demand-driven price pressures, has yet to fully reach 2%. He stressed that policy will be guided so inflation converges to around 2% without overshooting on a sustained basis. The framing suggests a desire to engineer a stable arrival at target rather than risk another period of excessive price acceleration.

Importantly, Ueda pushed back against concerns that the BoJ may be behind the curve in tackling inflation risks, saying policymakers do not believe they are lagging in responding to the threat of overly high inflation. That remark leans modestly hawkish, signalling confidence in the Bank’s current path.