Latest news with #Kazuo Ueda
Yahoo
05-08-2025
- Business
- Yahoo
BOJ to hike interest rates as growth and inflation increase, June minutes show
The Bank of Japan will hike interest rates further if growth and inflation continue to advance in line with its estimates, the minutes of the central bank's June meeting showed on Tuesday. The minutes showed most BOJ members supported keeping interest rates unchanged for the time-being, especially amid heightened uncertainty over U.S. trade tariffs. One member also supported the BOJ keeping interest rates unchanged indefinitely, amid concerns that Japanese economic growth and inflation will moderate. But a bulk of members, including Governor Kazuo Ueda, supported an eventual hike in interest rates, with economic growth and inflation expected to pick up in the medium-term. The BOJ largely maintained this notion during its late-July meeting, where the central bank kept interest rates unchanged but said it remained open to future hikes if inflation and economic growth increased. Japanese inflation was underpinned by a sharp rise in food prices this year, especially rice. Strong wage hikes also factored into increased consumer spending. The BOJ had left interest rates steady at 0.5% in June, and had outlined a slower pace of tapering its monthly bond purchases from 2026, amid heightened economic uncertainty. Related articles BOJ to hike interest rates as growth and inflation increase, June minutes show These Under-the-Radar Stocks Offer Better Risk-Reward Ratio Than Nvidia After soaring 149%, this stock is back in our AI's favor - & already +25% in July Sign in to access your portfolio
Khaleej Times
03-08-2025
- Business
- Khaleej Times
BOJ gears up to hike rates again but leaves free hand on timing
The Bank of Japan laid the groundwork last week for resuming interest rate hikes by spelling out explicitly for the first time the risks that persistent food price rises fan broad-based inflation. While markets took a dovish reading of BOJ Governor Kazuo Ueda's commentary after Thursday's policy meeting, much of his guidance suggests the bank is inching back towards action after a period of waiting and watching, analysts say. A shift in the board's inflation bias and its less gloomy view on the impact of U.S. tariffs also underscore the BOJ's resolve to pull the trigger once it is convinced the damage from higher levies will be within its expectations. Such hawkish signals in the BOJ's quarterly report, which represents the board's consensus view on the policy outlook, were qualified by Ueda's comments suggesting he was in no rush to raise interest rates. Still, Ueda said Japan was making some progress towards durably hitting the BOJ's 2% inflation target and stressed that its policy rate - at 0.5% - remains very low. "It's not as if we will wait until underlying inflation is firmly at 2%. Our decision is dependent on how likely underlying inflation will reach that level," Ueda told a news conference on Thursday when asked about the next rate-hike timing. All in all, the signals show the BOJ is preparing for another rate hike, while leaving all options open on the exact timing, analysts say. "The outlook report clearly shows the BOJ is starting to lay the groundwork for a rate hike," said Naomi Muguruma, chief bond strategist at Mitsubishi UFJ Morgan Stanley Securities. "The BOJ seems confident about prospects for durably hitting its inflation target," she said. "It may not be in a rush, but signaling that every policy meeting from now will be live." The BOJ holds its next policy meeting in September and another in October, when the board conducts a quarterly review of growth and price forecasts. It holds its final meeting for this year in December. A Reuters poll last month showed a majority of economists expect another rate hike by year-end. Swap rates indicate a 54% chance the BOJ will raise rates to 0.75% in October and a 71% chance in December. Second round effects When the BOJ compiled its previous outlook report on May 1, Ueda signalled a pause in its rate-hike cycle as President Donald Trump's April announcement of sweeping "reciprocal" tariffs jolted markets and stoked fears of global recession. Thursday's report showed signs the BOJ has ended that pause, as markets restored some calm and Japan's trade agreement with the U.S. in July reduced some uncertainty. For one, the BOJ removed the word "extremely" in describing uncertainty over U.S. trade policy. While Ueda stressed the need to await more data on the impact from U.S. tariffs, he said the risk of the economy "falling off the cliff" has diminished. The board also revised up its inflation forecast and said risks to the price outlook were balanced - a more neutral stance from that of May 1 describing risks as skewed to the downside. Furthermore, the BOJ report for the first time included a detailed assessment of how rising food costs - once seen as transitory - may lead to broad-based price rises. "It is possible that price rises will persist for longer than expected" as companies are passing on not just raw material but labour and distribution costs, the report said. A steady rise in the price of items like food, which consumers buy frequently, may induce "second-round effects" on underlying inflation, the BOJ said in the strongest warning to date on mounting price pressure. To be sure, food prices are among several factors the BOJ looks at in judging whether underlying inflation - or price rises driven by domestic demand - will durably hit its 2% target and justify raising rates. Other measures show underlying inflation remains short of 2%, Ueda said, brushing aside the view the BOJ may be behind the curve in addressing the risk of too-high inflation. But he said the BOJ must keep an eye out on how food prices and headline consumer inflation, which has remained above its target for well over three years, could affect inflation expectations. In exiting a decade-long stimulus last year and raising rates to 0.5% in January, the BOJ pointed to growing signs companies were shedding their long-held aversion to price hikes. Such change in corporate behaviour may be accelerating. A total of 1,010 food and beverage items saw prices rise in August with more than 3,000 items likely to see higher prices in October, think tank Teikoku Databank said on Thursday. "Food inflation will undoubtedly persist, which is probably why the BOJ highlighted the risk so clearly in the report," said veteran BOJ watcher Mari Iwashita. "Once there's more clarity that wage hikes will continue, the BOJ might go ahead and raise rates."
Japan Times
03-08-2025
- Business
- Japan Times
BOJ watchers bring forward next rate hike call after trade deals
Bank of Japan watchers brought forward their forecast for when they expect the next interest rate hike, after clarity over trade increased with U.S. President Donald Trump announcing deals, including one with Japan. Some 42% of 45 economists surveyed by Bloomberg anticipate the move in October, jumping from 32% in the previous survey. Analyst views were last canvassed before the announcement of Japan's trade pact with the U.S. on July 22, and last week's BOJ policy decision. Those predicting it in January slightly dropped to a third, while those expecting December doubled to 11%. No one foresees action at the next meeting in September as their base case, but in a risk scenario, about a quarter said the hike could come as soon as next month. Some 60% said the next hike could come as early as October. The results show that many BOJ watchers are convinced the next increase in borrowing costs is coming closer, even after Gov. Kazuo Ueda signaled caution on Thursday. Analysts pointed to the fact that the BOJ upgraded its inflation forecasts more than expected and raised its risk balance view as evidence the bank is making progress toward a rate move. "This meeting laid the groundwork for the next hike,' Kento Minami, senior economist at Daiwa Securities, wrote in his survey response. "Considering upside price risks from food and potentially a weak yen, the condition is suited for another move this year once resilience in corporate activity is confirmed.' The BOJ boosted its price projection sharply to 2.7% for this fiscal year from 2.2% in its quarterly outlook report released Thursday. The bank now sees the risk for prices as generally balanced after seeing only downside risks three months ago. Still, the hawkish signals in the report were toned down during Ueda's post-meeting news conference. The governor repeatedly highlighted the fact that though a little less than before, uncertainty remains high, and indicated little urgency toward a hike by saying there's a low risk of falling behind the curve in responding to inflation. Naka Matsuzawa, chief strategist at Nomura Securities, concluded that Ueda's news conference and the BOJ's statements were hawkish overall, partly because it's natural for a central banker to deny the likelihood of falling behind the curve as it's taboo to be in that position. Some 49% of surveyed economists said that Ueda's remarks at his news conference were neutral, while 44% said it was dovish. Only 5% said it was hawkish. The comments led the yen to break a key psychological level of ¥150 per dollar, reaching its weakest point since March on Friday. After yen weakness has played a major role in pushing the BOJ toward a policy shift in the past, analysts say it could happen again this time. Some 44% said the possibility is rising for the yen to become a key factor to nudge the bank toward another hike, while 35% didn't see such an increase. About a fifth said it's hard to tell. "If there's considerable yen depreciation, there's a risk scenario where the BOJ may opt for an earlier rate hike while highlighting upside movements in underlying inflation,' said Takeshi Yamaguchi, chief Japan economist at Morgan Stanley MUFG Securities. In addition to still unclear economic pressure from tariffs and a weak yen, many analysts cited political uncertainty as a potential hurdle for the central bank as it navigates monetary policy. Prime Minister Shigeru Ishiba is facing calls to resign after he faced a historic defeat in the Upper House election on July 20, losing a majority in both houses of parliament for his ruling coalition. Some 71% of the surveyed economists said that there is a risk that Ueda's board won't be able to raise rates this year if Ishiba is replaced by a monetary easing advocate, while 19% said that won't be the case. With Ueda's repeated message that he wants to parse data broadly and carefully before considering the next hike, some BOJ watchers doubt whether the BOJ will have enough data on hand to say another rate change is warranted this year. "It takes time to confirm the impact of tariffs in data, even if the effects end up being smaller than expected,' said Shigeto Nagai, former head of BOJ's international department and currently the head of Oxford Economics in Japan. "It's impossible to raise rates again this year.'
Yahoo
01-08-2025
- Business
- Yahoo
Analysis-BOJ gears up to hike rates again but leaves free hand on timing
By Leika Kihara TOKYO (Reuters) -The Bank of Japan laid the groundwork this week for resuming interest rate hikes by spelling out explicitly for the first time the risks that persistent food price rises fan broad-based inflation. While markets took a dovish reading of BOJ Governor Kazuo Ueda's commentary after Thursday's policy meeting, much of his guidance suggests the bank is inching back towards action after a period of waiting and watching, analysts say. A shift in the board's inflation bias and its less gloomy view on the impact of U.S. tariffs also underscore the BOJ's resolve to pull the trigger once it is convinced the damage from higher levies will be within its expectations. Such hawkish signals in the BOJ's quarterly report, which represents the board's consensus view on the policy outlook, were qualified by Ueda's comments suggesting he was in no rush to raise interest rates. Still, Ueda said Japan was making some progress towards durably hitting the BOJ's 2% inflation target and stressed that its policy rate - at 0.5% - remains very low. "It's not as if we will wait until underlying inflation is firmly at 2%. Our decision is dependent on how likely underlying inflation will reach that level," Ueda told a news conference on Thursday when asked about the next rate-hike timing. All in all, the signals show the BOJ is preparing for another rate hike, while leaving all options open on the exact timing, analysts say. "The outlook report clearly shows the BOJ is starting to lay the groundwork for a rate hike," said Naomi Muguruma, chief bond strategist at Mitsubishi UFJ Morgan Stanley Securities. "The BOJ seems confident about prospects for durably hitting its inflation target," she said. "It may not be in a rush, but signaling that every policy meeting from now will be live." The BOJ holds its next policy meeting in September and another in October, when the board conducts a quarterly review of growth and price forecasts. It holds its final meeting for this year in December. A Reuters poll last month showed a majority of economists expect another rate hike by year-end. Swap rates indicate a 54% chance the BOJ will raise rates to 0.75% in October and a 71% chance in December. SECOND-ROUND EFFECTS When the BOJ compiled its previous outlook report on May 1, Ueda signalled a pause in its rate-hike cycle as President Donald Trump's April announcement of sweeping "reciprocal" tariffs jolted markets and stoked fears of global recession. Thursday's report showed signs the BOJ has ended that pause, as markets restored some calm and Japan's trade agreement with the U.S. in July reduced some uncertainty. For one, the BOJ removed the word "extremely" in describing uncertainty over U.S. trade policy. While Ueda stressed the need to await more data on the impact from U.S. tariffs, he said the risk of the economy "falling off the cliff" has diminished. The board also revised up its inflation forecast and said risks to the price outlook were balanced - a more neutral stance from that of May 1 describing risks as skewed to the downside. Furthermore, the BOJ report for the first time included a detailed assessment of how rising food costs - once seen as transitory - may lead to broad-based price rises. "It is possible that price rises will persist for longer than expected" as companies are passing on not just raw material but labour and distribution costs, the report said. A steady rise in the price of items like food, which consumers buy frequently, may induce "second-round effects" on underlying inflation, the BOJ said in the strongest warning to date on mounting price pressure. To be sure, food prices are among several factors the BOJ looks at in judging whether underlying inflation - or price rises driven by domestic demand - will durably hit its 2% target and justify raising rates. Other measures show underlying inflation remains short of 2%, Ueda said, brushing aside the view the BOJ may be behind the curve in addressing the risk of too-high inflation. But he said the BOJ must keep an eye out on how food prices and headline consumer inflation, which has remained above its target for well over three years, could affect inflation expectations. In exiting a decade-long stimulus last year and raising rates to 0.5% in January, the BOJ pointed to growing signs companies were shedding their long-held aversion to price hikes. Such change in corporate behaviour may be accelerating. A total of 1,010 food and beverage items saw prices rise in August with more than 3,000 items likely to see higher prices in October, think tank Teikoku Databank said on Thursday. "Food inflation will undoubtedly persist, which is probably why the BOJ highlighted the risk so clearly in the report," said veteran BOJ watcher Mari Iwashita. "Once there's more clarity that wage hikes will continue, the BOJ might go ahead and raise rates." Sign in to access your portfolio
Yahoo
01-08-2025
- Business
- Yahoo
Analysis-BOJ gears up to hike rates again but leaves free hand on timing
By Leika Kihara TOKYO (Reuters) -The Bank of Japan laid the groundwork this week for resuming interest rate hikes by spelling out explicitly for the first time the risks that persistent food price rises fan broad-based inflation. While markets took a dovish reading of BOJ Governor Kazuo Ueda's commentary after Thursday's policy meeting, much of his guidance suggests the bank is inching back towards action after a period of waiting and watching, analysts say. A shift in the board's inflation bias and its less gloomy view on the impact of U.S. tariffs also underscore the BOJ's resolve to pull the trigger once it is convinced the damage from higher levies will be within its expectations. Such hawkish signals in the BOJ's quarterly report, which represents the board's consensus view on the policy outlook, were qualified by Ueda's comments suggesting he was in no rush to raise interest rates. Still, Ueda said Japan was making some progress towards durably hitting the BOJ's 2% inflation target and stressed that its policy rate - at 0.5% - remains very low. "It's not as if we will wait until underlying inflation is firmly at 2%. Our decision is dependent on how likely underlying inflation will reach that level," Ueda told a news conference on Thursday when asked about the next rate-hike timing. All in all, the signals show the BOJ is preparing for another rate hike, while leaving all options open on the exact timing, analysts say. "The outlook report clearly shows the BOJ is starting to lay the groundwork for a rate hike," said Naomi Muguruma, chief bond strategist at Mitsubishi UFJ Morgan Stanley Securities. "The BOJ seems confident about prospects for durably hitting its inflation target," she said. "It may not be in a rush, but signaling that every policy meeting from now will be live." The BOJ holds its next policy meeting in September and another in October, when the board conducts a quarterly review of growth and price forecasts. It holds its final meeting for this year in December. A Reuters poll last month showed a majority of economists expect another rate hike by year-end. Swap rates indicate a 54% chance the BOJ will raise rates to 0.75% in October and a 71% chance in December. SECOND-ROUND EFFECTS When the BOJ compiled its previous outlook report on May 1, Ueda signalled a pause in its rate-hike cycle as President Donald Trump's April announcement of sweeping "reciprocal" tariffs jolted markets and stoked fears of global recession. Thursday's report showed signs the BOJ has ended that pause, as markets restored some calm and Japan's trade agreement with the U.S. in July reduced some uncertainty. For one, the BOJ removed the word "extremely" in describing uncertainty over U.S. trade policy. While Ueda stressed the need to await more data on the impact from U.S. tariffs, he said the risk of the economy "falling off the cliff" has diminished. The board also revised up its inflation forecast and said risks to the price outlook were balanced - a more neutral stance from that of May 1 describing risks as skewed to the downside. Furthermore, the BOJ report for the first time included a detailed assessment of how rising food costs - once seen as transitory - may lead to broad-based price rises. "It is possible that price rises will persist for longer than expected" as companies are passing on not just raw material but labour and distribution costs, the report said. A steady rise in the price of items like food, which consumers buy frequently, may induce "second-round effects" on underlying inflation, the BOJ said in the strongest warning to date on mounting price pressure. To be sure, food prices are among several factors the BOJ looks at in judging whether underlying inflation - or price rises driven by domestic demand - will durably hit its 2% target and justify raising rates. Other measures show underlying inflation remains short of 2%, Ueda said, brushing aside the view the BOJ may be behind the curve in addressing the risk of too-high inflation. But he said the BOJ must keep an eye out on how food prices and headline consumer inflation, which has remained above its target for well over three years, could affect inflation expectations. In exiting a decade-long stimulus last year and raising rates to 0.5% in January, the BOJ pointed to growing signs companies were shedding their long-held aversion to price hikes. Such change in corporate behaviour may be accelerating. A total of 1,010 food and beverage items saw prices rise in August with more than 3,000 items likely to see higher prices in October, think tank Teikoku Databank said on Thursday. "Food inflation will undoubtedly persist, which is probably why the BOJ highlighted the risk so clearly in the report," said veteran BOJ watcher Mari Iwashita. "Once there's more clarity that wage hikes will continue, the BOJ might go ahead and raise rates." Sign in to access your portfolio
