The governor of the Bank of Japan reiterated the risk of overinflation and emphasized the importance of anchoring the 2% target

The Zhitong Finance App learned that Bank of Japan Governor Ueda Kazuo reiterated on Friday that there is a risk that underlying inflation will exceed the central bank's 2% target, and emphasized the importance of anchoring price pressure near that target. This speech comes on the eve of the Bank of Japan's policy meeting at the end of October, and the market is closely watching for clues about the timing of the next rate hike.

In a speech delivered by Vice Governor Uchida Shinichi at the Japan Credit Bank Conference, Ueda Kazuo said that factors such as the tense situation in the Middle East, demand related to artificial intelligence, and exchange rate fluctuations may affect the Japanese economy and prices, and there is a risk that underlying inflation will exceed the central bank's target.

“The idea of anchoring underlying inflation at around 2% is more important than ever,” said Kazuo Ueda, and emphasized the need to ensure that any overrun does not hurt the economy.

The above statement is consistent with what Kazuo Ueda said earlier this month. The Bank of Japan will hold a policy meeting on October 29th and 30th. At that time, the central bank will release new quarterly growth and inflation forecasts. Market participants will carefully study them to find clues about when the next rate hike will take place.

The Bank of Japan raised the key interest rate to a 31-year high last month, and at the same time indicated that it had entered the stage of preventing underlying inflation from exceeding the target level, which increased the possibility of policy tightening.

Currently, the market generally expects the Bank of Japan to stand still in October, and the December monetary policy meeting is seen as the next key window for interest rate hikes.