Bank of Japan’s Stance on Monetary Policy
On Friday, Bank of Japan (BOJ) Governor Kazuo Ueda emphasized the necessity for the central bank to uphold an accommodative monetary policy. This approach is crucial to fostering economic growth and ensuring that the underlying inflation gradually aligns with the targeted 2% rate.
During his address to Parliament, Ueda noted that the recent rise in the consumer price index surpassing the 2% target has primarily been driven by cost-push factors. He highlighted that elevated prices in food and fuel are significant contributors to this increase, but these pressures are likely to diminish over time.
This statement comes on the heels of the BOJ’s decision to raise the benchmark borrowing cost to 0.5%, marking the highest level in over 16 years. Ueda’s comments could help alleviate concerns regarding a potential yen-led risk-off sentiment in global markets, including the cryptocurrency sector, which was notably observed in August.
However, the governor reiterated that if the economy continues to develop as anticipated, the central bank is prepared to implement further rate hikes. According to analysis from ForexLive, traders are already speculating that the next BOJ rate increase may occur in July.
