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Kazuo Ueda, the Governor of the Bank of Japan (BOJ), emphasized the necessity of maintaining a loose monetary policy to support economic growth. He pointed out that inflation has not permanently reached the targeted levels and acknowledged that the BOJ might continue to raise interest rates. However, he cautioned that the market should not react excessively to these changes.
Key Highlights from Governor Ueda’s Statements
In his speech at the Japanese Parliament, Ueda stated that inflation has not sustainably reached the 2% level. He noted that the current increase in inflation is mainly driven by rising food and energy prices, which are expected to lose their impact over time.
It is noteworthy that the BOJ raised interest rates to 0.5% last week, marking the highest level in 16 years. Ueda reiterated that despite the rate hike, a supportive monetary policy should continue, stressing that tightening before achieving the targeted inflation level would increase economic risks.
Markets Anticipate BOJ’s Next Rate Hike in July
Future interest rate decisions by the BOJ are being closely monitored. Ueda stated that any rate hikes will depend entirely on economic data. If the economy progresses as expected, rates will be gradually increased.
According to market expectations, the BOJ’s next rate increase may occur in July. Analysis by ForexLive suggests that market participants believe the BOJ will continue raising rates during the summer, yet the central bank’s cautious stance indicates a preference to avoid sudden movements.
Ueda’s comments hold critical importance for global financial markets and the cryptocurrency sector. Changes in Japan’s interest rates directly influence not only domestic investors but also the risk appetite in international markets.
