BOJ/Ueda: Keeping Interest Rates Low for Too Long Could Accelerate Core Inflation Above 2%

Forex - Bank of Japan (BOJ) President Kazuo Ueda stated that keeping real interest rates adjusted for inflation low for an extended period could lead to excessive inflation and force the central bank to rapidly raise interest rates.

In response to a question about the potential harms of maintaining low interest rates for too long, Ueda said, "There is a risk that inflation may exceed our 2% target and continue to accelerate, which would compel us to raise interest rates more quickly than expected. This could lead to issues, so we need to appropriately adjust the level of monetary support."

Ueda pointed out that they see progress towards achieving sustainable price stability along with developments in service prices, while emphasizing that the weak yen is raising costs and having a significant negative impact on consumption. He also mentioned that the weak yen has positive effects on exports and tourism.