Ueda warns large or repeated BOJ rate hikes risk overshooting
The remarks come two days after the Bank of Japan raised its overnight call rate to 1.25%, its most closely spaced tightening moves in years.
Published
Bank of Japan Governor Kazuo Ueda said a large or repeated interest rate increase could risk overshooting. He said that after a rate increase to 1.5%, whether accommodative conditions continue would depend on economic and financial factors at that time, and that the bank aims to take appropriate action to avoid severe measures.
The comments follow the central bank's decision on Thursday to raise its overnight call rate to 1.25%, a move that came on top of a hike in June and marked Japan's most closely spaced tightening moves in years.
Ueda also said on the same day that no policy options are off the table and that the bank is considering different scenarios. He said he did not exclude any options regarding further rate increases and spoke of coordination with other central banks. He added that it is uncertain whether the pipeline disruption in Saudi Arabia will be prolonged.
Markets have priced in a path of quarter-point hikes through mid-2027, and Citigroup has forecast a further increase in December. Ueda's language on avoiding overshooting, paired with his insistence that future moves hinge on conditions at the time, points to a bank moving step by step rather than along a fixed schedule, a stance likely to keep the yen's exchange rate against the dollar volatile.