BOJ Governor Yuda’s comments at a news conference by Reuters

(Reuters) – Bank of Japan It raised interest rates on Friday after raising interest rates since the 2008 global financial crisis, signaling confidence that wage growth would stabilize inflation around its 2% target.

In a two-day meeting that ended on Friday, the BOJ raised its short-term policy rate from 0.25% to 0.5% – a level Japan has not seen in 17 years. It was carried by an 8-1 vote, with board member Toyoaki Nakamura dissenting.

Below are comments from BOJ Governor Kazuo Ueda’s post-meeting news conference in Japan, as translated by Reuters.

Salary increase

“Many firms are signaling they will continue to raise wages … Various data show the U.S. economy remains strong. Markets have calmed as the broader direction of Trump’s policies becomes clearer. Import price growth is slowing after a year. Year-over-year, the weak yen is pushing up import costs.” is it.

Policy amount

“If the economy and prices are in line with our forecasts, there is no change in our view on raising the policy level and adjusting the level of financial support.”

“The timing and speed of adjusting financial support depends on the current economic and price developments. We have no preconceived ideas. At each policy meeting, we take decisions based on economic and price growth as well as risks.”

A sharp improvement in inflation

“The rise in underlying inflation is moderate. I don’t think we’re behind the argument to deal with inflation.”

The impact of Trump’s tariff policies

“There’s a lot of uncertainty around the rate of tariffs. Once there’s more clarity, we’ll take that into our forecasts and reflect them when we’re making policy.”

“It is important to raise interest rates according to the changes in the economy and prices. We also need to see how our rate hikes affect the economy. Therefore, it is appropriate to gradually increase interest rates by several levels after carefully examining the impact of our activities.”

Terminal rate

“There is no change in our view on the neutral level, it is distributed in a wide band in our estimation. The estimated band has not changed much. In terms of the distance of the neutral rate, it has become shorter after raising the price. To 0.5%, but there is still a very small distance.

“The BOJ’s estimate shows that the rate of neutrality, nominally, is in the range of 1%-2.5%. There is still some distance for that range, the short-term rate is 0.5%, of course, we need to deepen the analysis. Where the rate of neutrality is, this is – The population and the structural changes of the economy may be affected, but it is difficult to know exactly.

Japan is still in decline

“The government has a slightly different rate of inflation compared to us as we focus on achieving 2 percent inflation in a sustainable way… In terms of the common definition of inflation, the economy seems to be avoiding deflation. Japan is a little bit further away from that.”

“The sharp rise in inflation in FY2025 is largely due to cost-push pressure expected in the first half of that year, which may dissipate in the second half. So, if wages rise consistently, we expect real wages to rise. Be positive.”