Bank of Japan Governor Ueda says its important to look at real rates

<p>Bank of Japan Governor Ueda speech in Nagoya titled:</p><ul><li>Japan's Economy and Monetary Policy (<a href="https://www.boj.or.jp/en/about/press/koen_2023/ko231106a.htm" target="_blank" rel="nofollow">full text</a>)</li></ul><p>Headlines via Reuters:</p><ul><li>
Japan's economy recovering moderately</li><li>Japan's economy
likely to continue recovering</li><li>Long-term rates may
rise somewhat but what's important is to look at real interest rate
that takes into account inflation expectations</li><li>
Even if long-term rates rise, real interest rate will move in
negative territory so monetary conditions will be sufficiently
accommodative</li><li>There is uncertainty
on whether Japan will see positive cycle of wage and inflation, as we
predict</li><li>We will patiently
maintain monetary easing to support economic activity</li><li>
We will continue massive bond buying even under new operation we
decided last week</li><li>We will conduct
nimble market operations when interest rate rise, depending on level
and speed of moves of long-term rates</li><li>Even if long-term
rates come under upward pressure, don't expect 10-year JGB yield to
sharply exceed 1%</li><li>Under YCC, we need
to carefully weigh the effect of the policy in stimulating economy,
and the side-effects</li></ul><ul><li>
Uncertainty surrounding our baseline scenario on economy is extremely
high, one of which is overseas economic outlook</li></ul><ul><li>

Must keep close eye on impact of rapid fed rate hike on markets, fx
moves</li><li>Need to be vigilant
to whether China's recovery momentum could be hampered by property
market adjustment</li><li>
Cost-push pressure on inflation likely to gradually dissipate,
although it may take more time given recent rises in oil prices</li><li>Don't expect
inflation to move back to around zero like during pre-Covid periods</li><li>Medium-, long-term
inflation expectations heightening moderately, likely affecting
firms' corporate wage-, price-setting behaviour</li><li>Likelihood of Japan
achieving 2% inflation target gradually increasing but not in a stage
where we can say so with enough certainty</li><li>Key is whether wages
will keep rising and such practice become embedded in society</li><li>Next year's spring
wage negotiation is particularly important, watching development
carefully</li></ul><ul><li>
There is uncertainty on whether wage hikes will continue next year</li><li>Another key factor
is whether firms will set prices based on assumption wages will
rising</li></ul><p>Balanced commentary from Ueda here, but its fair to say there is nothing here to indicate a tightening on policy is imminent. </p>

This article was written by Eamonn Sheridan at www.forexlive.com.