BOJ chief says underlying inflation 'quite close' to price goal

Bank of Japan Governor Kazuo Ueda said on Monday that underlying inflation has come quite close to the central bank's 2% target, according to Business Recorder. He pointed to strong worldwide demand for artificial intelligence as an extra source of price pressure, alongside a tight labour market and a moderate recovery in the economy. Ueda also noted that rising raw material costs linked to the Middle East conflict are lifting inflation.

The remarks precede the central bank's major policy gathering later this month, where new quarterly growth and inflation estimates will be released. Markets will scrutinise those estimates for hints about the timing of the next rate hike.

Ueda told parliament that raising rates at a suitable pace would help prevent sharp jumps in bond yields. He warned that failing to adjust the policy rate could push long-term interest rates higher if markets feared an inflation overshoot.