MNI BRIEF: Gradual Hikes To Keep BOJ Ahead Of Inflation - Ueda
MNI (TOKYO) - Bank of Japan Governor Kazuo Ueda said on Monday the BOJ needs to raise the policy interest rate gradually to avoid falling behind the curve on inflation.
Not raising the rate as appropriate risked inflation accelerating above 2% amid low real interest rates, which would force the BOJ to hike more rapidly, Ueda told reporters.
“Even if economic activity and prices are on track, we will not raise the policy every meeting," he cautioned. "We are focused on whether the probability of achieving the 2% price target will be realised."
When asked about a potential rate hike in December, Ueda said policymakers will assess the outlook for economic activity and prices, and the risks based on economic data available at the meeting.
The governor also said that the BOJ continues to closely watch the impact of forex moves on economy and prices. (See MNI INTERVIEW: BOJ Jan Hike Most Likely, But Yen Crucial)
On recent yen weakeness, Ueda does not think carry positions have shifted to one-side, which differed from July, indicating the currency will not weaken sharply.