MNI BRIEF: Gradual BOJ Hikes Intact Despite Uncertainty - Ueda

The Bank of Japan will maintain its stance of gradually raising the policy rate if economic and price conditions are realised, despite uncertainties surrounding the economic and price outlook remaining high, Governor Kazuo Ueda told lawmakers Tuesday.

“Even if the U.S. tariffs were determined, uncertainties over how they will affect economies and trade remain high,” Ueda told lawmakers, repeating his view that the BOJ’s baseline scenario on the economy and prices, outlined in the May 1 Outlook Report, could change considerably depending on evolving tariffs and the global economy.

He emphasised that the BOJ has no intention of raising interest rates just to create room for future cuts, stating the bank will not ignore underlying economic and price conditions.

On bond markets, Ueda noted that short- to medium-term JGB yields have a greater influence on the economy than super long-term yields. 

Still, he said the BOJ must carefully monitor whether longer-end yield increases spill over to shorter maturities. (See MNI POLICY: BOJ Could Buy More JGBs, Keep Lowering Holdings)

Ueda added it is important for the BOJ to closely assess corporate financing through its headquarters and branches, given ongoing uncertainties.