MNI BRIEF: Underlying Inflation To Be BOJ Rate Driver - Ueda

While headline inflation remains above 2%, underlying inflation is still consistently below that level and will be key for future policy rate decisions, Bank of Japan Governor Kazuo Ueda said Tuesday.

"Further rate hikes depend on data developments, particularly the three underlying components of underlying inflation," Ueda told the ECB's central banking forum at Sintra. Ueda said the BOJ's current policy rate was likely below neutral, but accepted that the BOJ's analysis of the level of “r*” produced a very wide range of estimates.

Ueda also outlined the uncertainties including the looming July 9 tariff deadline with the U.S., which could determine Japanese economic performance in coming months.( See MNI INTERVIEW: Jan Hike Likely, Dec Not Ruled Out - Ex BOJ)