BoJ Governor Ueda says Japan's economy recovering moderately albeit with some weakness; easy monetary conditions will support the economy

Economy:

• Economic growth is likely to be modest as trade policies lead to slowdown in overseas economy and decline in profits. Likely to rise thereafter with overseas economies returning to moderate growth path.


• Expect next wage hikes to be roughly in line with this year's.


• Want to carefully watch wage negotiations especially in the autos sector given tariff impact.


• Overall consumer mindset is improving, consumption is solid.


• One factor for consumption trend is wage hike next Shunto.


• Want to see early momentum of the spring wage negotiations.

Inflation:

• Underlying inflation, rate of increase in inflation will gradually increase but at the level in-line with price stability target in H2 of projection period.


• Food inflation has been increasing due to temporary factors, but expects it to moderate.

Policy:

• Will continue to raise policy rate if economy and prices move in live with forecast.


• Doesn't think there is a risk of falling behind the curve.


• No pre-set idea about timing of next rate hike


• Unable to determine terminal rate, has a wide range.


• Reason for holding off on rate hikes is due to overall economies and trade policy uncertainties still being high.


• Not thinking about taking specific policy action based on specific stock price levels.

Future Policy:

• Outlook from July largely realised in the next 3 months' data


• Increased likelihood of achieving outlook


• Need some more data until we decide to adjust degree of monetary easing.


• Possible to change policy even in the middle of the budget being compiled.


• Will adjust rate irrespective of the political situation.


• Conducting monetary policy requires long-term view, unlike government policy that could be swayed by elections. 

Dissent:

• BoJ's Takata and Tamura dissented to the Quarterly report


• Takata proposed to add a line about consumer inflation reaching price stability target in the statement.


• Tamura proposed adding a line on underlying inflation rate to be largely in line with inflation target beyond second half of projection period.


• One dissenter pointed out the risk of falling behind the curve.

Tariffs:

• Want to see a little longer to see how US tariffs will impact the economy.


• Effects from tariffs emerging gradually but slowly.


• Tariff costs will be passed onto consumers going forwards sot here are risks of impact growing.

Global Economy:

• Downside risks to US economy have subsided vs July outlook.


• Will look at whether there is negative news on US economy before initial Japan wage outlook appears.

Reaction details (06:41)

• [06:40GMT] Upside seen in USD/JPY as Ueda said there is no pre-set idea about timing of next rate hike. USD/JPY went from 153.07 to 153.46 over the space of 4 minutes.

Analysis details (06:31)

• Overnight, the BoJ maintained its short-term interest rate target at 0.5%, as expected, with board members Takata and Tamura the dissenters who proposed raising short-term rates by 25bps - the overall take from the statement was that it avoided any overtly hawkish signals.

30 Oct 2025 - 06:31- ForexGeopolitical- Source: Newswires