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BOJ’s Ueda Stresses Data-Dependent Path as Tariff Risks Cloud Outlook

Ueda's tariff warning led markets to trim odds of an October move.

Overview

  • Governor Kazuo Ueda reiterated that the Bank of Japan will raise rates only if growth, wages and prices align with its forecasts and said decisions will be made without preconceptions.
  • He cautioned that the 15% U.S. tariff would weigh on Japan’s economy, corporate profits and wage-setting, and said the bank will scrutinise how these effects evolve before acting.
  • Ueda said underlying inflation is progressing toward a durable 2% and highlighted growing signs of U.S. labor-market slowing as a key uncertainty for Japan’s outlook.
  • The September Tankan showed a second straight improvement in large manufacturers’ sentiment to a diffusion index of 14 and a strong non-manufacturing reading of 34, though consumer-facing sectors weakened.
  • The yen eased to around 147.5 per dollar after Ueda’s remarks as traders reduced the perceived chance of an October hike, with attention also on Japan’s LDP leadership vote and the U.S. data blackout during the government shutdown.