Bank of Japan (BoJ) Governor Kazuo Ueda (pictured) said on Wednesday that the BoJ won't change its monetary policy "just to deal directly" with movements in the foreign exchange (FX) market.
Ueda added that the price stability target of 2% is "within sight" as the cycle between wages and prices "had become more solid." He went on to say that the bank decided "to set the uncollateralized overnight call rate as the policy interest rate and encourage that rate to remain at around 0 to 0.1 percent." Furthermore, he warned that "waiting to exit until trend inflation hits 2% would have heightened risk of inflation overshoot," which would force the bank to aggressively hike rates.
He noted that the monetary policy might be changed if "FX moves lead not just to rising import prices, but risk pushing up trend inflation more than expected."
