Saturday, 02 August 2025
Jakarta
--:--
Tokyo
--:--
Hongkong
--:--
New York
--:--
BOJ Avoids Hinting at Chances of January Rate Hike
Wednesday, 25 December 2024 13:34 WIB | FISCAL & MONETARY |Bank of JapanBOJ

Bank of Japan Governor Kazuo Ueda avoided giving a clear signal that he might raise interest rates next month, sticking to his view that the bank needs to continue monitoring risks to the economy in comments that weighed on the yen.

"The timing and pace of adjusting the degree of monetary accommodation will depend on developments in economic activity and prices as well as financial conditions going forward," Ueda said in a speech at a business conference in Tokyo on Wednesday.

"The bank needs to pay attention to various risk factors at home and abroad, and to examine how these factors will affect the outlook and risks to Japan's economic activity and prices and the likelihood of those outlooks materializing," he said.

The speech came after Ueda indicated last week that the BOJ might wait longer before raising interest rates, a view that surprised investors who had been expecting a move in January if the bank did not act at its December meeting. The unexpected dovish stance triggered a drop in the yen and a warning from Japan's finance ministry about unilateral and speculative currency moves.

Ueda on Wednesday appeared to keep his options open, noting the need to keep interest rates low to support the economy while at the same time flagging the risks of keeping rates low for too long.

The yen weakened to 157.37 against the dollar following his comments in Tokyo from around 157.13 at the start of his speech. The move suggested further recalibration toward future rate hikes among market players. However, the speed of the move suggests little immediate chance of the yen breaking through a five-month low of 157.93 hit last week, or the kind of move that might trigger further currency intervention by Japan.

As Japan transitions toward achieving stable 2% inflation, the BOJ will maintain easy financial conditions by keeping interest rates lower than the neutral level to firmly support the economy, Ueda said. "We must ensure that the Japanese economy does not return to a deflationary or low-inflation environment," he said.

The BOJ kept its benchmark interest rate unchanged at 0.25% at its December policy meeting. In a speech Wednesday, Ueda said he had a lot to watch, indicating he wanted to see more data to gauge momentum in the annual spring wage talks and the outlook for the U.S. economy.

"With regard to the Japanese economy, the key issue in the near term is how the annual spring labor-management wage negotiations will develop," Ueda said.

The BOJ raised interest rates in March for the first time in 17 years just days after the release of preliminary results of this year's annual wage talks between the country's largest labor union federation and employers.

However, some economists and policymakers already feel the country is ready for another rate hike. Japan's inflation has held at or above the BOJ's target for two and a half years and the economy has continued its moderate recovery. Ahead of last week's policy meeting, about 86% of BOJ watchers said economic conditions warranted a rate hike at the meeting.

Naoki Tamura, a hawkish member of the BOJ's policy board, called for a rate hike last week. He cited an economy that remained in line with the BOJ's projections and rising upside risks.

Raising rates could also ease pressure on the yen, which is near levels that prompted government intervention in the market earlier in the year. Tokyo has spent nearly $100 billion to prop up the currency so far this year.

Concerns about Prime Minister Shigeru Ishiba's minority government gaining support for its annual budget may be one factor keeping central bank policymakers cautious about raising rates for now. A small opposition party that Ishiba had hoped would back the ruling party's budget plan has not fully backed the initial proposal. Traders saw a 46% chance of a rate hike in January as of Wednesday with an 82% chance of a March increase, according to the latest overnight index swap rates.

This was Ueda's last scheduled public speech in 2024. The BOJ board meets again to deliver its next policy decision on Jan. 24.

Source: Bloomberg

RELATED NEWS
BOJ Keeps Rates Unchanged, Lifts Price View After Trade Deal...
Thursday, 31 July 2025 10:57 WIB

The Bank of Japan held its benchmark interest rate steady and raised its inflation outlook more than expected in a sign it may be closer to a rate hike, while continuing to warn that it's still assess...

Powell's press conference takeaways....
Thursday, 31 July 2025 02:08 WIB

Economy is in a solid position.Inflation is somewhat above target.Believe the current stance of policy leaves us well positioned to respond in a timely way.Moderation in growth reflects a slowdown in ...

Fed Leaves Rates Steady...
Thursday, 31 July 2025 01:09 WIB

The Federal Reserve left the federal funds rate steady at the 4.25%–4.50% target range for a fifth consecutive meeting in July 2025, in line with expectations. Policymakers noted that although swings...

Fed's Waller wants July interest rate cut amid rising growth, job market risks ...
Friday, 18 July 2025 07:46 WIB

Federal Reserve Governor Christopher Waller said on Thursday he continues to believe the U.S. central bank should cut interest rates at the end of this month amid mounting risks to the economy and the...

Fed Minutes Show Committee Split Around Inflation Worries ...
Thursday, 10 July 2025 01:06 WIB

The emerging divide among Federal Reserve officials over the outlook for interest rates is being driven largely by differing expectations for how tariffs might affect inflation, a record of policymake...

LATEST NEWS
AUD/USD slips despite soft NFP as RBA rate cut

The Australian Dollar (AUD) remains under pressure against the US Dollar (USD) on Friday, giving back most of its earlier gains despite broad weakness in the Greenback following a disappointing Nonfarm Payrolls (NFP) data. The AUD/USD initially...

Oil falls $2 a barrel on worries about OPEC+ supply, US jobs data

Oil prices $2 a barrel on Friday because of jitters about a possible increase in production by OPEC and its allies, while a weaker-than-expected U.S. jobs report fed worries about demand. Brent crude futures settled at $69.67 a barrel, down $2.03,...

Yen primed for multi-year rally

The yen has suffered a difficult month, but BCA Research thinks the Japanese currency is primed for a multi-year rally. At 08:30 ET (12:30 GMT), USD/JPY traded 0.2% lower at Y150.49, having earlier in the session climbed as high as Y150.91, the...

POPULAR NEWS
Latest News: US Core PCE Inflation Holds Steady at 2.8% in June, Compared to 2.7% Expected
Thursday, 31 July 2025 20:03 WIB

Annual inflation in the United States (US), as measured by the change in the Personal Consumption Expenditures (PCE) Price Index, rose to 2.6% in...

Asia-Pacific markets trade mixed as investors assess U.S.′ 15% tariffs on South Korea
Thursday, 31 July 2025 07:28 WIB

Asia-Pacific markets traded mixed Thursday as investors assessed the U.S.′ blanket 15% tariffs on imports from South Korea and awaited details on...

US: Initial Jobless Claims Rise Slightly to 218,000 Last Week
Thursday, 31 July 2025 19:49 WIB

According to a report from the US Department of Labor (DOL) released on Thursday, the number of Americans filing new applications for unemployment...

European markets close mixed; Novo Nordisk extends losses
Thursday, 31 July 2025 00:34 WIB

The pan-European Stoxx 600 index provisionally closed just below the flatline on Wednesday, with sectors diverging as second quarter earnings season...