Bank of Japan will continue raising interest rates if economic and price trends align with forecasts, Governor Kazuo Ueda said in a speech on Monday. He noted Japan’s economy maintained a moderate recovery last year despite weaker corporate profits from higher U.S. tariffs. “Wages and prices are highly likely to rise together moderately,” Ueda remarked, adding that adjusting monetary support will aid sustained growth. In December, the BoJ lifted its policy rate by 25bps to 0.75%, the highest in 30 years, marking another step away from decades of near-zero borrowing costs. Still, real borrowing costs remain deeply negative as consumer inflation has exceeded the 2% target for nearly four years. Markets now await the board’s quarterly outlook report at the January 22-23 meeting for signals on how policymakers view inflationary pressures from the yen’s recent weakness.
