Bank of Japan (BoJ) Governor Kazuo Ueda addressed reporters in a press conference following his participation in the Group of 20 (G20) finance leaders’ meeting held in Washington on Thursday. Ueda’s statements centered on the possibility of the central bank implementing interest rate adjustments in response to significant declines in the value of the Yen, emphasizing the potential impact of currency fluctuations on future monetary policy decisions.
Ueda highlighted the linkage between the Yen’s depreciation and its potential to spur inflation, indicating that a considerable weakening of the currency could lead to an increase in trend inflation through higher prices of imported goods. He underscored the importance of monitoring this trend closely, suggesting that if the inflationary impact becomes substantial, it may necessitate a revision of monetary policy.
In his remarks, Ueda emphasized the BoJ’s commitment to closely examining the implications of the Yen’s recent decline on the economy and price levels. These insights will be factored into the central bank’s upcoming quarterly assessments of growth and inflation forecasts, slated to be presented at the forthcoming policy meeting next week.
Market observers noted a modest reaction in currency markets to Ueda’s statements, with the USD/JPY pair trading at 154.57, registering a marginal decline of 0.05% at the time of reporting. This response suggests a cautious stance among investors as they assess the potential implications of the BoJ’s deliberations on future monetary policy actions.
