MNI BRIEF: BOJ Would Adjust Rates Earlier If Necessary - Ueda

Bank of Japan Governor Kazuo Ueda said on Wednesday the BOJ would adjust rates earlier if the outlook for prices or upside risks are revised upward, and that risks surrounding the price outlook remain high to upside and downside.

Both short- and long-term real interest rates are significantly negative, Ueda told business leaders in Tokyo, adding that firms’ behaviour indicated the linkage between wages and prices could strengthen further than expected. (See MNI POLICY: BOJ Sees Risk of Earlier Inflation Rebound)

Assuming cost-push pressure led by higher import prices will subside, it is also necessary to monitor whether moves to pass on increases in wages and other costs to selling prices will weaken, the governor said.

A rise in crude oil prices and depreciation of the yen are also risks, he said, adding that “compared to the past, exchange rate developments are more likely to affect prices.”