BOJ Ueda reiterates sustained wage–price cycle, signals further rate hikes if f'casts hold

BOJ's Sustained Wage-Price Cycle

Governor Ueda reaffirmed that Japan is moving toward a more durable inflation regime with a mechanism in place for wages and prices to rise moderately in tandem. The BOJ intends to continue raising rates if the economy and prices develop broadly in line with forecasts, emphasizing a gradual normalization path rather than a rapid tightening cycle.

Market Impact

Ueda's comments reinforce expectations of gradual BOJ tightening, providing modest support for the yen, yet the overall market response may remain limited without fresh evidence on wages, inflation, or the policy timeline. The BOJ is working to remove extraordinary stimulus while maintaining wage-price momentum. Markets view this information as broadly in line with expectations, confirming the BOJ's readiness for gradual adjustments.

Conclusion

The BOJ's statement highlights a long-term outlook where normalization of wages and prices contributes to achieving inflation targets. Future data-driven adjustments will be crucial in influencing the yen's movement.