Ueda says Japan's wage-price cycle is turning positive
The BOJ governor says anchoring inflation near 2% is becoming more important, repeating language he has used since September
Published
Bank of Japan Governor Kazuo Ueda said Japan is seeing a positive cycle of rising wages and recovering prices. He said it is becoming more important to anchor underlying inflation around 2%.
The remarks echo a message delivered on Ueda's behalf on Friday, when a deputy told reporters the central bank would keep its focus on anchoring inflation at that same 2% level, a stance it has held since raising rates in September. Two days before that, BOJ board member Junko Koeda said rate adjustments should come in a timely way as the risks to prices tilt higher, adding to a run of hawkish comments even as traders have been pricing in a pause this month.
Ueda's language keeps the same frame he has used for weeks: rate decisions depend on confirmation that inflation holds near 2%, not on a fixed timetable. That framing is one markets have already absorbed, following a surprise in the Tokyo inflation reading and reports that the Bank of Japan will hold rates this month. The repetition has kept Japanese long-term bond yields anchored near the multi-decade highs they reached in late September rather than pushing them further up, since nothing in the comments adds urgency beyond the data-dependent language officials have used for weeks.
The channel that matters most for US rate markets remains the yen-funded carry trade, in which investors borrow cheaply in yen to buy higher-yielding assets elsewhere. That trade depends on the pace of actual rate increases from the Bank of Japan, not on another restatement of its 2% inflation goal.