(MENAFN) Bank of Japan Governor Kazuo Ueda expressed a willingness to consider early adjustments to interest rates should inflation outpace the central bank's expectations. Speaking at an event organized by the Yomiuri International Economic Association, Ueda acknowledged the possibility of accelerating inflation prompting proactive measures from the bank.
Ueda emphasized that if there is a significant upward revision in price expectations or if potential risks to inflation intensify, the Bank of Japan would deem it appropriate to implement early adjustments to interest rates. This stance underscores the central bank's commitment to closely monitoring economic indicators and adjusting monetary policy as needed to maintain price stability.
The Bank of Japan's decision in March to terminate most unconventional easing measures, including negative interest rates, reflects a shift in its policy approach amidst evolving economic conditions. Ueda noted that while core inflation appears to be progressing towards the bank's 2 percent target, uncertainties persist regarding the trajectory of interest rates, with both upside and downside risks looming.
Moreover, Ueda highlighted the bank's vigilance towards the impact of yen depreciation on core inflation, signaling a readiness to intervene through monetary policy measures if necessary. He acknowledged that fluctuations in foreign exchange rates now have a more pronounced effect on prices compared to previous periods, underscoring the interconnectedness of global economic dynamics and domestic monetary policy considerations.
Ueda's remarks offer insights into the Bank of Japan's strategy for navigating potential inflationary pressures and maintaining monetary stability in the face of evolving economic challenges. As inflationary trends and external factors continue to shape the economic landscape, the central bank remains poised to adjust its policy framework to ensure price stability and sustainable growth.
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