BOJ Ueda Voices Confidence Conveying Rate Hike Message to Market 

​The Bank of Japan’s message on gradual interest hikes has been clearly received by financial markets, Governor Kazuo Ueda said, adding that more hikes will take place if its economic outlook is realized.Published Jan 31, 2025  •  2 minute read Join the conversation Kazuo Ueda on Jan. 24. Photo by Akio Kon /Photographer: Akio Kon/Bloomberg(Bloomberg) — The Bank of Japan’s message on gradual interest hikes has been clearly received by financial markets, Governor Kazuo Ueda said, adding that more hikes will take place if its economic outlook is realized. Article contentArticle contentUeda said the BOJ’s policy settings are still accommodative after recent rate hikes and that would remain the case as the central bank continues to support the inflation trend. The governor said the underlying inflationary trend is below the bank’s 2% target. Advertisement 2Story continues belowThis advertisement has not loaded yet, but your article continues below. View more offersArticle content“We are aiming for a gradual pickup in prices accompanied by a solid increase in wages,” Ueda said. “To achieve this, at present, we believe we need to support economic activity by maintaining accommodative monetary easing so that underlying inflation will gradually rise toward 2%.”The BOJ last week raised its benchmark interest rate for the third time in less than year as it continues to normalize policy after years of experimentation aimed at sparking inflation. The bank’s policy rate is now the highest since 2008. The BOJ said that it expects inflation to stay at or above its 2% target through March 2027 in a show of confidence that it has sustainable price gains. Ueda and his deputy, Ryozo Himino gave comments before the January policy meeting that hinted at a rate hike. Following the comments, overnight swaps showed that market players were almost fully pricing in a rate hike in contrast to a previous rate hike in July when the likelihood of a hike was seen at less than 50%.Market participants are now looking for clues on the likely pace of further rate hikes and the likely peak they will reach in the current rate hike cycle. A majority of economists surveyed by Bloomberg this week eyes July for the next hike. Still, 45% of economists also flagged that the central bank could move as early as April in their risk scenarios.Advertisement 3Story continues belowThis advertisement has not loaded yet, but your article continues below.Article contentAnother national election is likely to take place in July with persistent inflation almost certain to be a major issue among voters. That might be a factor that makes the BOJ more reluctant to move that month.Prime Minister Shigeru Ishiba is well aware of the discontent among voters over the cost-of-living crunch following the ruling coalition’s major setback in last year’s election. In an economic stimulus package announced toward the end of last year, he added fresh cash handouts to help low-income hou