Ueda keeps March and April rate-hike window open, says wage gains could speed target timing.

Earlier here, recapping now ICYMI.

Summary:

  • Ueda keeps tightening bias intact

  • March and April meetings live

  • Target timing could be brought forward

  • Strong wage talks key upside risk

  • No need to wait for April Tankan

  • BOJ says not behind curve

  • December hike impact under review

  • Yen weakness complicates timing

  • Political pressure clouds outlook

  • Economists still eye 1% by June

Bank of Japan Governor Kazuo Ueda used a Yomiuri newspaper interview to keep alive the prospect of another near-term rate increase, signalling that both the March and April policy meetings remain “live” for a potential move.

Ueda reiterated the central bank’s basic stance of continuing to raise interest rates if Japan progresses toward its economic and price projections. Under forecasts released in January, the BOJ expects underlying inflation to reach its 2% target in the latter half of fiscal 2026 through fiscal 2027. However, he said the timing could be brought forward if this year’s spring wage negotiations deliver stronger-than-expected pay gains and firms pass higher labour costs on to consumers more swiftly.

“We will hold a policy meeting in March and April, so we would like to reach a decision by scrutinising data available by then,” Ueda said, addressing growing market speculation that a hike could come as early as April.

Importantly, he indicated the BOJ does not necessarily need to wait for the April 1 Tankan business sentiment survey before acting, noting the Bank conducts a range of other surveys and gathers sufficient information through multiple channels.

Ueda also pushed back against criticism that the BOJ is behind the curve in tackling inflation, arguing underlying price pressures have yet to fully reach 2%. In assessing the impact of December’s rate hike, he said policymakers are watching how higher borrowing costs affect bank lending, corporate investment and household consumption.

The remarks come amid heightened political sensitivity. Prime Minister Sanae Takaichi has expressed reservations about further tightening, and recent government board nominations viewed as pro-stimulus have weighed on the yen.

The BOJ next meets on March 18–19, followed by April 27–28, when updated forecasts will be released. A majority of economists polled by Reuters expect rates to reach 1% by end-June, underscoring that normalisation is widely seen as ongoing.

This article was written by Eamonn Sheridan at investinglive.com.

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