BOJ Governor Ueda's interest rate message

Bank of Japan Governor Kazuo Ueda has signaled the possibility of a rate hike in the second half of 2024. Bank of Japan Governor Kazuo Ueda has signaled the possibility of a rate hike in the second half of 2024, highlighting the possibility of a strengthening inflation momentum in an interview with local media. In his first media interview since the central bank raised interest rates for the first time since 2007 last month, Ueda said the bank’s chances of hitting its inflation target would increase steadily from the summer to the fall, the Asahi reported on Friday. The yen hit a two-week high of 150.81 per dollar in Tokyo on Friday as comments hinted at a narrowing in U.S.-Japan interest rate differentials. The comments suggest the BOJ wants to confirm the distribution of wage increases and their impact on services prices before raising rates again. Ueda’s comments in the interview also marked a slight shift after the president repeatedly avoided giving clear indications about the specific timing of a possible follow-up move after the March 19 hike. He has so far said any move would depend on the economy and inflation, as well as financial conditions. Ueda reiterated his view that the bank would respond to exchange rate movements if they had a non-negligible impact on the virtuous wage cycle and price growth that the bank is targeting.