Japanese Finance Minister Katsuya Satsuki stated that no options will be ruled out regarding actions on the exchange rate and that appropriate responses will be made concerning currency movements. Following the remarks, the yen experienced a short-term surge, with the USD/JPY pair briefly retreating below the 159 level.
On the same day, Bank of Japan Governor Kazuo Ueda explicitly stated on Wednesday that, despite sharp market fluctuations due to speculation about an early election, the central bank will continue to raise interest rates when conditions permit, affirming that the path of monetary policy remains unchanged.
"If our outlook materializes, we will continue to raise interest rates and adjust the degree of monetary easing in line with improvements in the economy and inflation," Ueda said at a New Year's meeting hosted by the Japanese Regional Banks Association in Tokyo. This was his first public statement since speculation intensified about an early election called by Prime Minister Takaichi Sanae.
Most economists anticipate the Bank of Japan will hold steady at its policy meeting on January 23rd, with many predicting the next rate hike may not occur until around June. The weakening yen, which raises import costs, could complicate Ueda's objective of achieving stable price growth.
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