BoJ’s Ueda: The BoJ will closely monitor recent yen weakness for policy

Bank of Japan (BoJ) Governor Kazuo Ueda answered a parliamentary inquiry on Thursday. Ueda said that the Japanese central bank can adjust the degree of monetary accommodation by raising interest rates if trend inflation accelerates gradually, per Reuters. 

Key quotes

“Low real rate supports economy and inflation.”

“Need to monitor FX and oil for real wages.”

“Increase rates if price trend rises as anticipated.”

“There is no clear evidence that Japan’s natural rate of interest continued to fall from five years ago when it’s estimated to have been around zero.”

“BoJ can adjust the degree of monetary accommodation via rate hikes if trend inflation accelerates gradually.”

“Expects strengthening virtuous cycle between wages and prices.”

“Abrupt FX moves negatively impact Japan’s economy.”

“Monitor Ex-OTL for Real Wages.”

“The BoJ to closely monitor recent yen weakness for policy.”

“Policy response possible if foreign exchange affects price trend.”

Market reaction

At the time of writing, USD/JPY is trading 0.03% higher on the day to trade at 155.56.