BOJ's Koeda says rate adjustments should be timely as price risks tilt higher
The Bank of Japan official's remarks add to a string of hawkish signals even as traders bet on a pause this month.
Published
Bank of Japan official Koeda said the central bank should adjust interest rates in a timely manner and pointed to considerable upside risks to prices.
The comment extends a run of hawkish signals from the BOJ that has included Governor Ueda's remarks in September and a surprise in Tokyo inflation data. Citigroup has also moved up its forecast for the bank's next hike. That tone stands against reports this month suggesting the BOJ is unlikely to raise rates again at its October 30 meeting, a view fed by cooling producer prices, Bloomberg reports.
Japan's 10-year government bond yield has been elevated for weeks. It climbed to a 28-year high near 3.11% in late September on expectations of tighter policy, then eased 5.5 basis points to 3.025% on Oct 8.
Koeda's language keeps those long yields anchored near their recent highs rather than letting them drift lower, and it reinforces the yen-funded carry trade that has been the main channel through which Japanese policy has pushed into US rate markets this cycle. The remarks do not depart from the data-dependent stance BOJ officials have repeated for weeks, but they sustain the pressure that has kept global long-end yields elevated.