Bank of Japan (BoJ) Governor Kazuo Ueda reaffirmed the central bank's commitment to raising interest rates if underlying inflation nears its 2% target. While core consumer inflation has stayed above 2% for three years, demand-driven pressures remain subdued.
Ueda told parliament the BoJ is keeping real interest rates negative to support stable, sustained inflation. "Once we have more conviction that underlying inflation will approach or hover around 2%, we will continue to raise rates," he said. The BoJ ended its decade-long stimulus last year, lifting short-term rates to 0.5% in January as inflation neared its goal.
However, rising U.S. tariffs and global uncertainty have prompted downward revisions to growth forecasts, complicating the path for further hikes. Ueda also cautioned about the risk of hitting the zero lower bound, which could weaken the BoJ's ability to respond to future downturns. The bank is set to convene its monetary policy meeting on June 16-17.
Source : Trading Economics
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