BOJ Deputy Governor Uchida: The economic target will be met and the interest rate hike process will be steadily advanced

In his speech on Wednesday, Shinichi Uchida pointed out that the Japanese economy is currently on track for a moderate recovery. Looking ahead to this year, wage negotiations between companies and trade unions are expected to achieve fruitful results, and wage levels will most likely increase significantly, which will undoubtedly inject strong impetus into subsequent consumption and become a powerful engine to drive economic growth.

He further explained that as potential inflation gradually accelerates and wages rise steadily, accurately regulating the intensity of monetary support through moderate interest rate increases is like laying a solid foundation for the long-term stable operation of the economy and stable price fluctuations, which is of great significance to achieving stable development of the macro economy.

Uchida made an important speech to business elites in Shizuoka, and said firmly: "As long as the economic and price blueprint outlined in the latest outlook report in January can be implemented step by step, the central bank will surely steadily advance the process of raising the policy interest rate to help the economy move forward steadily." Focusing on the price outlook, Uchida revealed that based on professional judgment, the Bank of Japan expects that as cost-driven pressure gradually eases, the annual increase in consumer inflation will steadily slow down and move closer to the established target of 2%; at the same time, benefiting from the continued increase in wages, the basic inflation rate will steadily accelerate and is also expected to reach the key node of 2%.

Uchida added: "Based on various factors, it is predicted that from the second half of fiscal 2025 to fiscal 2026, both the actual inflation rate and the underlying inflation rate are likely to stabilize at around 2%, laying a solid foundation for the continued prosperity of the economy."