Ueda says it is hard to tell if BOJ policy is still too easy
The governor says the central bank can act again without a long wait, a day after raising the policy rate to 1.25%
Published
Bank of Japan Governor Kazuo Ueda said on Friday that it is hard to determine whether financial conditions are still too easy. He said the central bank will weigh financial conditions, including the effects of its previous rate increases, before deciding on further moves.
Ueda said the BOJ does not need a long observation period before acting again. The remarks come a day after the central bank raised its overnight call rate to 1.25%, a quarter-point increase that followed a hike in June and marked Japan's most closely spaced tightening moves in years.
Ueda has previously said no policy options are off the table, and has pointed to coordination with other central banks. He has also warned that large or repeated rate increases risk overshooting. Citigroup forecasts the BOJ will raise rates by another 25 basis points in December.
Ueda's readiness to act without lengthy deliberation tilts slightly toward near-term tightening risk, but his caution about judging conditions as too easy, and his concern over overshooting, keep the door open to patience. That keeps the BOJ's path data-dependent rather than settled, leaving the yen exposed to shifts in expectations between the Federal Reserve and the BOJ rather than to conviction from the BOJ alone.