Bank of Japan Governor Kazuo Ueda said on Monday that while private consumption remains resilient, households are feeling the strain of higher prices, underscoring the need for the bank to monitor demand closely as it calibrates policy.
Ueda noted that U.S. tariffs are squeezing manufacturers’ profits but said he does not expect the impact to broaden meaningfully into capital expenditure. He emphasised that the key question for monetary policy is whether Japan’s recent shift toward rising wages and prices can be sustained.
On the currency front, Ueda stressed the importance of the yen moving “stably and in line with fundamentals.” He warned that a weak yen continues to push up consumer inflation, and that firms’ active wage- and price-setting behaviour makes exchange rate swings more influential than in the past. Policymakers, he added, must remain alert to the possibility that FX movements could shape inflation expectations and affect underlying inflation dynamics.
The remarks reinforce the BOJ’s cautious but tightening-leaning stance as it weighs further rate hikes against the backdrop of wage momentum, imported inflation pressures and the effects of global trade policy.
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