Bank of Japan Governor Kazuo Ueda said on Friday, October 16, at a press conference in Bangkok that the bank cannot tolerate inflation rising further above its 2% target. Japanese and international outlets reported the remarks on October 17, and South Korea's Kyunghyang Shinmun carried the same account. He spoke after a series of meetings that included G20 finance ministers and central bank governors.

Ueda said underlying inflation, excluding temporary factors, is now quite close to 2%, and stressed that stabilizing inflation around that level has become more important than before. The comments are read as a signal that the BOJ will keep raising its policy rate in line with economic, price and financial developments.

Rate path and financial conditions

According to Japanese media, the BOJ raised its policy rate to around 1.25% at its September meeting. Ueda described financial conditions as still accommodative and said economic activity and prices are broadly in line with the bank's forecasts.

In currency markets the dollar traded near 157.95 yen after the remarks, little changed on the day. FXStreet called the comments a modest hawkish tilt that should limit yen weakness, though the immediate market reaction was small.

The date of the next policy meeting and any decision were not confirmed in the reports reviewed. The Japan Times reported on October 13 that the BOJ was leaning against back-to-back hikes in October, and on October 5 that it was set to say underlying inflation had reached 2%. Both reports cited sources; the BOJ has not confirmed them.

Ueda said the pace and timing of hikes will depend on how exchange rates, demand linked to artificial intelligence and Middle East developments affect prices. He noted that some overseas policymakers were more bullish on AI demand than the BOJ, but said this week's discussions did not change the bank's baseline outlook.