Boj Ueda Hints At Further Rate Hikes

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Boj Ueda Hints At Further Rate Hikes

Boj Ueda Hints At Further Rate Hikes If Inflation Rises

According to the latest update from the Bank of Japan, Ueda has made it clear that they will go towards further rate hikes in case the inflation turns higher.

Another key change from the BoJ will be its bond-buying program which is also expected to experience a reduction later down the road.

Ueda also added that losing monetary policy is the need of the hour for the Japanese economy. However, that will only be possible if the inflation remains under the BoJ's 2% target. Additionally, the long-term forecast for inflation in Japan is near 1.5%, according to the bank.

Boj To Cut Down Jgb Purchases

In March 2024, the BoJ made an unprecedented move by ending a lot of monetary policy measures of an unconventional nature. At the same time, the BoJ has also tied its interest rate policy with the upcoming economic data.

It appears that the BoJ is still very cautious as it wants to see how the policy changes will impact inflation & other economic measures. Once they start to see some data, appropriate changes may be made including potential rate hikes.

Another key takeaway from Ueda's comments is the BOJ's purchases of JGBs, which are very large. The governor has also hinted that they will be cutting down their purchases of government bonds. It appears that the reduction of JGB purchases is poised to go down regardless of the upcoming economic data.

According to the experts, the recent comments from the BoJ governor mean that the interest rates will remain between 0% and 0.1% in the short term.

Looking ahead, the markets will be fishing for clues on when the BoJ will go ahead with its next rate hike as the inflation and GDP situation unfolds.

These are interesting times as the BoJ is now entering into a hawkish phase while the rest of the world is moving out of that phase starting this year.

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