TOKYO, Dec 9 (Reuters) – The Bank of Japan plans to ramp up government bond buying if long-term interest rates rise sharply, Governor Kazuo Ueda said on Tuesday, noting that the recent rate rises have been “somewhat rapid.”
“Recently, long-term rates have been rising at a somewhat rapid pace,” Ueda told parliament, as the benchmark 10-year Japanese government bond yield hit 18-year highs this week.
He also said that in exceptional circumstances where long-term interest rates rise sharply in deviation from normal market movements, the BOJ intends to take flexible measures, such as increasing government bond purchases.
On monetary policy, Ueda said the likelihood of the BOJ’s baseline economic and price outlook materialising has been gradually increasing, considering reduced uncertainty around the U.S. economy and tariff policies.
“Ahead of our next policy meeting, we are actively collecting information on firms’ wage plans for the next fiscal year,” he said. “Taking this and other information into account, we intend to make an appropriate judgment,” he added.
He also said that adjusting the degree of monetary easing would help achieve the central bank’s inflation target at a time when a tighter labour market was increasing upward pressure on wages and prices while real interest rates remain extremely low.
(Reporting by Makiko Yamazaki; Editing by Tom Hogue and Jacqueline Wong)
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