Bank Of Japan Governor “Highest inflation in 30 years…Interest rate hikes will continue”

Japanese economic authorities hinting at departing from the long-standing low interest rate policy (Source: Kaohoon International)

Kazuo Ueda, Governor of the Bank of Japan, reaffirmed the plan to continue raising the base interest rate, stating that Japan's inflation rate is at the highest level in the past 30 years. According to a report by Yonhap News on the 27th, Governor Ueda stated, “Japan's current inflation rate is between 1.5~2.0%, a high level not experienced in decades.”

He further stated, “While continuing to raise interest rates, we will gradually reduce the intensity of monetary policy easing,” indicating an intention to maintain a financial tightening stance for the time being. This is interpreted as reflecting the central bank's perception that the Japanese economy is entering a full-fledged inflation phase after overcoming deflation.

The market is paying attention to the possibility that Japan's interest rate hikes could affect the strengthening of the Yen, the rise in Japanese government bond yields, and even global capital flows. Governor Ueda has continued the full-fledged interest rate normalization policy, following the termination of negative interest rates last March.