Bank of Japan Governor Kazuo Ueda reiterated that the BOJ will continue raising interest rates as underlying inflation moves closer to its 2% target, while leaving the timing of the next hike open.
The comments were made in Bangkok during the IMF and World Bank annual meetings, as well as gatherings of G7 and G20 finance ministers and central bank governors. A post from the market-moving news account Walter Bloomberg, published at 7:58 p.m. Taipei time on Oct. 16, said Ueda had reaffirmed the BOJ’s tightening path.
The signal came after the BOJ lifted its policy rate to 1.25% in September, the highest level in 31 years. Ueda confirmed the direction again, but did not specify when the next increase would come.
Walter Bloomberg highlighted three points, but Ueda’s wording was more conditional
Walter Bloomberg’s post distilled the remarks into three takeaways: the BOJ will keep hiking as underlying inflation nears 2%; economic conditions are broadly in line with forecasts; and the timing and pace of future rate increases will depend on exchange-rate moves, AI-related demand, and the situation in the Middle East.
Reporting compiled by investingLive said those points were broadly accurate, though Ueda’s original wording carried more conditions. He said the BOJ would continue raising rates because underlying inflation is nearing 2% and financial conditions are still accommodative. He also said opinions heard in Bangkok this week had not strayed from the BOJ’s baseline scenario, and that policymakers would discuss at the end-of-month meeting whether to revise the assessment that underlying inflation is nearing 2%.
On AI, Ueda’s point was narrower than the headline summary suggested. He said there were slightly more policymakers at the meetings who were positive on AI demand than the BOJ had initially assumed, but views across countries and the BOJ’s own assessment did not differ much on how much inflation pressure AI could generate.
Deputy Governor Shinichi Uchida’s speech text flagged upside inflation risk
Earlier the same day, Deputy Governor Shinichi Uchida delivered a speech text on Ueda’s behalf. According to Reuters, the prepared remarks said there was a risk that underlying inflation could exceed 2%, and stressed that keeping inflation stable around 2% was "more important than before."
Oct. 29-30 meeting is next, but markets lean toward December
The BOJ’s next monetary policy meeting is scheduled for Oct. 29-30, when it will also release a new set of growth and inflation forecasts.
Bloomberg, in a report cited by The Japan Times, said people familiar with the matter indicated BOJ officials were inclined not to deliver back-to-back hikes in October. December was seen as the earliest possible timing for another move, though the final decision could still change at short notice. Market pricing cited by investingLive showed a low probability of an October increase and put the odds of a hike at the Dec. 18 meeting at about 75%.
Hawkish voices inside the BOJ have also grown louder. Board member Junko Koeda said in Kumamoto on Oct. 15 that the central bank should not be overly cautious about raising rates. Minutes-style summaries from the BOJ’s September meeting had already listed Middle East developments, AI demand and exchange rates as factors to watch when deciding on the timing of further hikes, matching the variables Ueda referred to this time.
Yen moves and crypto carry-trade risk remain in focus
In foreign exchange markets, FXStreet said Ueda’s remarks had little immediate effect on dollar-yen, which stayed around 157.95. U.S. Treasury Deputy Secretary Erin Browne, also speaking in Bangkok that day, said Japan was no longer in a deflationary environment and that both the yen and monetary policy should adjust accordingly. She also warned that sharp and disorderly currency swings could force investors to unwind positions.
That matters for crypto markets because traders have been watching the risk tied to yen-funded carry trades, in which investors borrow cheaply in yen and deploy capital into higher-yielding assets. FXStreet said Ueda’s signal on future tightening would reduce the yen’s appeal as a funding currency.
Even so, the market reaction was muted. CoinGecko data showed that as of 9:55 p.m. Taipei time on Oct. 16, Bitcoin was trading at about $81,742, up roughly 2.4% over the previous 24 hours. A day earlier, Bitcoin had briefly fallen below $80,000 after U.S. producer price index data came in above expectations.
Investors now turn to the BOJ’s late-October meeting
For now, Ueda has restated the direction of policy rather than the timing. Exchange rates, AI demand and Middle East developments are now the main variables he has put on the table. Alongside Koeda’s hawkish remarks and U.S. comments on the yen, the BOJ’s Oct. 29-30 meeting and its updated inflation projections are the next points the market is watching.
For crypto traders, the BOJ’s pace of tightening and the path of the yen remain key indicators in judging whether yen carry trades could face broader unwinds.