BoJ’s Ueda: Central bank will continue to raise policy rates - FXStreet

Bank of Japan Governor Kazuo Ueda has indicated the central bank will continue raising its policy rate, reinforcing the view that Japan's long period of ultra-loose monetary policy is gradually winding down. The remark matters because the BoJ has been the outlier among major central banks, keeping borrowing costs near zero while peers tightened aggressively. Any signal of further normalization therefore carries outsized weight for currency and bond markets.

The key mechanism to watch is the interest-rate differential. Higher Japanese rates, even modest ones, can narrow the gap with other economies and influence the yen, which has been sensitive to that spread. Japanese government bond yields may also respond, with ripple effects on global bond markets given Japan's role as a major creditor nation.

For observers, the focus now shifts to the pace and timing of future moves, and whether data on wages, inflation, and consumption support them. Ueda's guidance sets direction, but each meeting's decision will still depend on incoming evidence.