BOJ Governor Ueda Says Japan's Financial Environment Remains Sound Despite Rate Hike

Japan's benchmark interest rate has been raised to a 31-year high. However, BOJ Governor Kazuo Ueda assessed that Japan's financial environment remains capable of supporting the economy.

According to First Square on October 18, Governor Ueda stated at a press conference following the monetary policy meeting that 'Japan's financial conditions can still support the economy.'

The BOJ decided to raise the benchmark rate from 1.00% to 1.25%, an increase of 0.25 percentage points. Governor Ueda explained this move was intended 'to stabilize the achievement of a 2% inflation target.'

Regarding further rate hikes, Ueda indicated they will monitor economic and price trends before deciding. He stated that 'the final level of interest rates will become clear after confirming future economic and price trends' and that 'at each monetary policy meeting, we will reassess risks anew.'

Despite the rate hike, the yen fell to around 157 per dollar. With two out of nine policy committee members voting against the rate increase, market interpretations suggest the BOJ may adjust its tightening pace.