Bank of Japan Expected to Maintain Interest Rates Amid Inflation Goals

The Bank of Japan is set to hold its policy meeting this Wednesday and Thursday, with widespread expectations that interest rates will remain at 0.75%. According to RTHK, Bank of Japan Governor Kazuo Ueda addressed the parliament, noting that as companies pass on increased costs of raw materials and labor to consumers, both wages and prices are rising moderately. He stated that the underlying inflation rate is accelerating towards the 2% target, with projections indicating it will approach this level between the second half of the 2026 fiscal year and the 2027 fiscal year. Ueda emphasized that the central bank will guide monetary policy appropriately to ensure the inflation target is achieved sustainably and stably. He reiterated that price increases must be accompanied by robust wage growth. He also mentioned that long-term interest rates are primarily determined by the market, with fluctuations reflecting market views on economic, price, fiscal, and monetary policy prospects. Ueda reaffirmed that if long-term rates deviate from normal trends or rise sharply under special circumstances, the central bank is prepared to act flexibly and intervene in the government bond market.