BOJ Holds Rates but Signals December Hike as Ueda Flags Inflation Vigilance

The Bank of Japan kept interest rates steady on Friday but declared victory in its nearly 14-year battle to hit its 2% price target, signaling the next rate hike could come as soon as December. Governor Kazuo Ueda said underlying inflation has reached levels consistent with the target, warranting vigilance against upside price risks. "We saw the need to scrutinise a bit more economic and price risks, as well as financial conditions," Ueda said at his post-meeting news conference. "But underlying inflation has reached levels consistent with our price target. Financial conditions remain accommodative. There are various upside risks." Ueda stressed the BOJ has not yet sustainably achieved its goal and will adjust policy as appropriate to anchor inflation around 2%. "That doesn't mean we will just sit and wait," he said. The central bank described its stance as a new, more hawkish phase open to raising rates once every few months.