BoJ's Ueda says to keep raising interest rates if economy on track

Bank of Japan Governor Kazuo Ueda said early Wednesday that the Japanese central bank will continue to raise interest rates if economic and price developments move in line with its projections, per Reuters.

Key quotes

Japan's economy is recovering moderately, albeit with some weaknesses.

Japan's economy is likely to continue growing above potential.

Expect underlying inflation to accelerate gradually.

Uncertainty surrounding Japan's economy, prices remain high.

Expect to keep raising interest rates if the economy, prices move in line with our forecasts made in the quarterly outlook report.

Japan's real interest rate level remains extremely low.

Recent high inflation is due largely to the lagged effect of past rises in import costs, recent acceleration in food price rises.

Such cost-push factors are likely to gradually dissipate.

Underlying inflation is likely to gradually converge towards our 2% target even when a temporary boost from food inflation disappears.

There is uncertainty on whether food, rice prices will fall but on a year-on-year basis, the pace of increase likely to slow ahead.

Underlying inflation is still somewhat below 2%.

We have yet to sufficiently achieve our price target. 

Market reaction

At the time of press, the USD/CAD pair was up 0.07% on the day at 150.15.