Overview
- The Bank of Japan lifted its policy rate to 0.75% last week, the highest in 30 years, extending its shift away from ultra‑easy policy.
- Governor Kazuo Ueda said underlying inflation is steadily approaching 2% and indicated the BOJ stands ready to raise rates further if its baseline outlook holds.
- He noted that real interest rates remain very low and that tighter labor markets and demographic constraints are reinforcing wage gains.
- Ueda said companies are passing higher labor and input costs through to prices across goods and services, signaling wages and prices are rising together.
- Markets are watching the Jan. 22–23 meeting for quarterly projections that could illuminate the inflation effects of the weak yen after earlier remarks were read as dovish and weighed on the currency.