BOJ's Ueda Strikes Careful Tone After Hawkish Hold
By Megumi Fujikawa
TOKYO--Bank of Japan Gov. Kazuo Ueda reaffirmed his stance of seeking further interest-rate increases, even as the Middle East conflict heightens uncertainty over the economic outlook.
"In a situation where upside inflation risks have significantly materialized or are continuing to grow, and provided the risk of an economic downturn or a major recession remains limited, a rate hike would be a possibility," Ueda said at a news conference Tuesday.
The comments came after the bank's policy board voted 6-3 to keep interest rates unchanged at 0.75%--an unusually high level of dissent that analysts view as setting the stage for a rate hike as early as June.
The central bank also raised its inflation projections to reflect the surge in oil prices triggered by the Iran war and tempered near-term growth views.
Ueda said that while three board members were concerned about a potential acceleration in inflation, the majority saw little urgency to act immediately even though they were aware of the risk.
Economists characterized the BOJ's decision as a "hawkish hold," boosting expectations that the door to a June rate hike is open.
However, some said that Ueda struck a somewhat more neutral tone during the press conference.
"Recent negative developments have made Governor Ueda a lot less confident that their baseline economic outlook will be realized," MUFG Bank analyst Lee Hardman said in a note.
Ueda reiterated that the BOJ wants more time to gauge the impact of the Middle East conflict and that the next rate decision depends on the extent to which risk scenarios associated with geopolitical concerns materialize.
Overall, the central bank chief refrained from giving a strong signal that a hike is coming as early as the BOJ's next meeting, said Hardman at MUFG.
"I want to further examine the developments in the Middle East and their impact on the Japanese economy and inflation--specifically, whether the probability of our baseline outlook is rising again and how the balance of risks surrounding economic activity and prices might shift," Ueda said.
Write to Megumi Fujikawa at megumi.fujikawa@wsj.com
(END) Dow Jones Newswires
April 28, 2026 04:38 ET (08:38 GMT)
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