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Bank of Japan Governor Ueda spoke at the Meeting of Councillors of Keidanren
(Japan Business Federation) in Tokyo in Thursday, December 25, 2025. The title of the speech, reflective of its content, was “Toward the Achievement of the Price Stability Target
Accompanied by Wage Increases”.Summary:Ueda said underlying inflation is steadily approaching 2%, supported by tight labour markets and changing wage-price behaviour. With real rates still very low, the BOJ is prepared to keep raising rates as economic conditions improve.-Bank of Japan Governor Kazuo Ueda said Japan’s underlying inflation is continuing to accelerate gradually and is steadily approaching the central bank’s 2% target, reinforcing the case for further interest-rate increases as economic conditions improve.Speaking to Japan’s business lobby Keidanren, Ueda said tight labour market conditions are likely to persist barring a major economic shock, putting sustained upward pressure on wages. He pointed to irreversible structural factors, including Japan’s declining working-age population, as key drivers of ongoing labour shortages.Ueda said companies are increasingly passing on higher labour and raw-material costs not only for food, but across a wider range of goods and services. This, he argued, is evidence that Japan is finally seeing a virtuous cycle take hold in which wages and prices rise together — a dynamic the Bank of Japan has long sought to establish.“Amid tightening labour market conditions, firms’ wage- and price-setting behaviour has changed significantly in recent years,” Ueda said, adding that achievement of the 2% inflation target, accompanied by wage growth, is now steadily approaching.With real interest rates still deeply negative, Ueda reiterated that the BOJ remains prepared to continue raising rates if its baseline outlook for the economy and prices is realised. He stressed that policy adjustments would be calibrated in line with economic and inflation developments rather than follow a preset path.Adjusting the degree of monetary accommodation, Ueda said, will allow the central bank to smoothly secure its inflation goal while supporting sustainable, long-term economic growth — signalling confidence that Japan’s shift away from ultra-easy policy is becoming increasingly durable.
This article was written by Eamonn Sheridan at investinglive.com.
💡 DMK Insight
Bank of Japan Governor Ueda’s recent remarks on inflation and wage growth are crucial for traders to understand Japan’s monetary policy trajectory. With underlying inflation reportedly steady, this signals a potential shift in the Bank’s stance on interest rates, which could impact the yen’s value against major currencies. Traders should be particularly attentive to any hints about future rate hikes, as these could influence forex positions significantly. Moreover, if wage increases accompany inflation stabilization, it could lead to a stronger consumer spending outlook, further bolstering the economy. This scenario might attract foreign investment, pushing the yen higher. However, there’s a flip side: if inflation remains stubbornly high without corresponding wage growth, the Bank may face pressure to tighten policy more aggressively, which could lead to volatility in both the forex and equity markets. Keep an eye on the USD/JPY pair, especially around key resistance levels, as any unexpected shifts in Ueda’s tone could trigger significant market reactions. Watch for upcoming economic data releases that could provide context to Ueda’s statements, particularly on wage growth and consumer spending metrics.
📮 Takeaway
Monitor the USD/JPY pair closely; any shifts in Ueda’s tone could lead to significant volatility, especially around key resistance levels.
