The market isn’t convinced. Owing partly to increasing expectations for a hike, the benchmark 10-year bond yield hit the highest level since 2008 Friday.
The BOJ has frequently reiterated that it will keep raising borrowing costs if its economic outlook materializes. Ueda, a former economics professor turned central bank governor, ditched the world’s last negative rate policy and the bank’s yield curve control in March last year, backing away from a massive monetary easing program that ran for more than a decade.
The BOJ now expects price trends will be in line with its goal sometime between October next year and March 2028, or the second half of its three-year projection period. It has, however, stressed high uncertainty due to the unknown impact of US trade policies.
In a speech Friday, Federal Reserve Chair Jerome Powell opened the door to a cut in September, spurring the yen to surge 1% against the dollar as investors anticipate the rate gap with Japan will narrow.
Ueda was making his second appearance at the Jackson Hole conference. He skipped the gathering last summer after being called into parliament to explain the bank’s decision to hike rates in July 2024, a move that contributed to global financial ructions after it caught some traders by surprise.
