BoJ’s Ueda: Japan's economy recovering moderately albeit with some weaknesses

Bank of Japan (BoJ) Governor Kazuo Ueda said on Tuesday that the Japanese economy is recovering moderately albeit with some weaknesses. Ueda added that price trend is approaching 2%. 

Key quotes

Japan's economy recovering moderately albeit with some weaknesses.

September tankan showed business sentiment in good shape.

Underlying inflation approaching 2%.

Economy, prices moving in line with our baseline forecasts.

Financial conditions are accommodative.

Even after September rate hike, accommodative financial conditions continue to support economic activity.

Will continue to raise policy rate in accordance with economic, price, financial developments.

Pace and timing of future policy adjustment will be decided based on likelihood of our baseline projections materialising as well as risks. 

Important to anchor underlying inflation around 2%.

Market reaction

At the time of writing, the USD/JPY pair is up 0.18% on the day at 158.20.

Ueda keeps BoJ on gradual tightening path as Yen focus stays on inflation

FXS Speechtracker scores the speech at 7.2, exactly in line with Ueda’s historic average, signaling a consistent policy tone rather than a surprise shift. The emphasis on the economy “recovering moderately,” favorable business sentiment, and accommodative financial conditions, even after the September rate hike, points to a mildly hawkish bias, as BoJ remains committed to further gradual rate increases while avoiding aggressive tightening.

By stressing that underlying inflation is approaching 2% and that economy and prices are moving in line with baseline forecasts, Ueda reinforces confidence that BoJ is on track toward the inflation target, which supports a constructive backdrop for the Yen. The pledge to “continue to raise policy rate” in accordance with economic, price, and financial developments, and the importance of anchoring inflation around 2%, underpins expectations of a slow but ongoing normalization, likely offering medium-term support to the Yen while limiting immediate volatility.