Ueda Kazuo: As underlying inflation rises, further interest rate hikes will follow

Bank of Japan Governor Kazuo Ueda stated on Wednesday that Japan's economic growth may slow but will continue to recover moderately. The risk of inflation exceeding 2% remains, and the Bank of Japan will continue to raise interest rates based on economic, price, and financial conditions, while considering the timing and pace of rate hikes alongside assessing the impact of the Middle East conflict. He noted that following the recent rate hike, financial conditions remain accommodative and continue to support economic activity.

On the inflation front, the central bank plans to continue raising rates as underlying inflation approaches 2%, with the timing and pace of future rate hikes to be determined after careful review based on the likelihood of achieving baseline forecasts and associated risks. Additionally, amid high oil prices, potential inflation may exceed the Bank of Japan's 2% target. He also stated that the Bank of Japan must closely monitor developments in the Middle East, the profitability of AI-related investments, and the potential impact of overseas non-bank financial institution activities on Japan's financial system. Ueda said: "Overall, Japan's financial system remains stable." These remarks were read on his behalf by Bank of Japan Deputy Governor Ryozo Himino. (Jin Shi)