BoJ's Ueda: Easy monetary conditions will support economy

Additional quotes

Japan's economy recovering moderately albeit with some weakness.

Japan's economic growth likely to moderate as trade policies lead to slowdown in overseas economy, decline in corporate profits.

Easy monetary conditions will support economy.

Japan's economic growth likely to rise thereafter with overseas economies returning to moderate growth path.

Impact of rising food prices, including rice, likely to dissipate.

Developments on trade policies and how overseas economy, price react to them are highly uncertain.

Must pay attention to trade policies' impact on financial, fx markets, japan's economy and prices.

Will continue to raise policy rate if economy, prices move in line with forecast, in accordance with improvements in economy, prices.

Important to judge whether outlook will be achieved without any preconception.

Fed's rate cut would support the US economy.

No change to outlook on world economy.

Not seeing tariff impact on capex, wage, job trends in Japan.

Japan economy withstanding tariff impact.

No need to revise july outlook report figures.

Underlying inflation gradually rising toward 2%.

Will thoroughly check tariff impact on economy including firms' response.

Uncertainty remains over impact of US trade policies on forex.

It would take more than 100 years if ETF, j-reits sales proceed at decided pace.

Board members did not agree to proposal by Takata, Tamura.

Underlying inflation still below 2% but approaching it.

Need to be mindful of downside risks to prices from tariffs.

Tariff cost likely to be passed down to consumers in US from now.

Gauging Christmas shopping trend one of important points.

Want to look at more data.

Plan to proceed with ETF, j-reit sale until they are fully disposed.

Difficult to judge when any impact of tariffs would appear on US consumption.

Not considering changing pace of ETF sales to adjust monetary policy.

Not thinking now of repurchasing ETFs as monetary policy tool.

It was difficult give guidance on how to dispose of ETFs.

BoJ will do policy response if next prime minister is elected.

No comment on domestic political developments.

Today's ETF decision did not take recent stock price into account.

Downside risks to economy still present.

Market reaction

USD/JPY recovers losses following these comments. The pair was last seen trading 0.08% lower on the day near 147.86.

Japanese Yen FAQs

What key factors drive the Japanese Yen?

The Japanese Yen (JPY) is one of the world’s most traded currencies. Its value is broadly determined by the performance of the Japanese economy, but more specifically by the Bank of Japan’s policy, the differential between Japanese and US bond yields, or risk sentiment among traders, among other factors.

How do the decisions of the Bank of Japan impact the Japanese Yen?

One of the Bank of Japan’s mandates is currency control, so its moves are key for the Yen. The BoJ has directly intervened in currency markets sometimes, generally to lower the value of the Yen, although it refrains from doing it often due to political concerns of its main trading partners. The BoJ ultra-loose monetary policy between 2013 and 2024 caused the Yen to depreciate against its main currency peers due to an increasing policy divergence between the Bank of Japan and other main central banks. More recently, the gradually unwinding of this ultra-loose policy has given some support to the Yen.

How does the differential between Japanese and US bond yields impact the Japanese Yen?

Over the last decade, the BoJ’s stance of sticking to ultra-loose monetary policy has led to a widening policy divergence with other central banks, particularly with the US Federal Reserve. This supported a widening of the differential between the 10-year US and Japanese bonds, which favored the US Dollar against the Japanese Yen. The BoJ decision in 2024 to gradually abandon the ultra-loose policy, coupled with interest-rate cuts in other major central banks, is narrowing this differential.

How does broader risk sentiment impact the Japanese Yen?

The Japanese Yen is often seen as a safe-haven investment. This means that in times of market stress, investors are more likely to put their money in the Japanese currency due to its supposed reliability and stability. Turbulent times are likely to strengthen the Yen’s value against other currencies seen as more risky to invest in.