BoJ’s Ueda: Fluctuations in foreign exchange are one of the key elements significantly affecting Japan’s economy and price levels

BoJ Governor Ueda Highlights Impact of Currency Movements

During Monday's Asian trading session, Bank of Japan Governor Kazuo Ueda emphasized the significant influence that foreign exchange market fluctuations have on Japan’s economy and price levels, following the publication of the central bank’s Summary of Opinions.

Key Points from Governor Ueda

• The central bank is paying close attention to movements in the foreign exchange market.
• As Japanese companies increasingly raise prices and wages, the effects of currency volatility on inflation have grown more pronounced.
• Shifts in the FX market can influence underlying inflation by altering inflation expectations.
• The BoJ will carefully assess how currency changes may impact its ability to meet growth and price targets, as well as associated risks, and will adjust policy as needed.
• Decisions on monetary policy will be made after thoroughly evaluating how market and currency developments could affect the goal of achieving stable 2% inflation.
• Long-term interest rates are shaped by market perceptions of economic conditions, price trends, and fiscal and monetary policy outlooks.
• If short-term rates are raised at a suitable pace, long-term rates are expected to remain steady.
• The BoJ is committed to guiding policy appropriately and maintaining clear communication with markets to ensure stability in long-term interest rates.

Market Response

The Japanese Yen (JPY) strengthened following Governor Ueda’s remarks. At the time of reporting, the USD/JPY pair had declined by 0.26%, trading near 159.90.