Tokyo, 6 October 2026 – Bank of Japan Governor Kazuo Ueda has emphasised the growing importance of anchoring underlying inflation around the central bank’s 2% target, reinforcing the case for further monetary tightening if economic and price developments continue to follow the baseline outlook. The message keeps Japanese rates, the yen and regional capital flows at the centre of Asian investor positioning.
Ueda said the economy was recovering moderately and long-term inflation expectations were rising. Those conditions suggest Japan is moving further away from the deflationary environment that shaped monetary policy for decades. The central bank must now prevent expectations from drifting too high without tightening so rapidly that household demand, business investment or financial stability are damaged.
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