Bank of Japan (BOJ) Governor Kazuo Ueda warned on May 26 that long-term interest rates could rise if the BOJ fails to take timely action to control inflation. The remarks come as Japan faces mounting price pressures, challenging the central bank's current ultra-loose monetary policy.
According to Ueda, inaction could lead to volatility in the bond market, affecting long-term borrowing costs for the government and businesses. The BOJ governor stressed the need to closely monitor inflation developments and be ready to adjust policy if necessary to maintain economic stability.
The BOJ currently maintains short-term interest rates at -0.1% and controls the yield curve on 10-year government bonds, but global inflation pressures and a weak yen are testing this commitment. Markets are now awaiting the BOJ's next move in upcoming policy meetings.
