On Wednesday, Governor of the Bank of Japan Kazuo Ueda emphasized the central bank's readiness to enact measures within the monetary policy framework. This stance may stem from concerns over yen fluctuations, particularly if they have a considerable impact on inflation levels. Consequently, the central bank head underscored heightened warnings regarding potential economic ramifications stemming from the yen's recent notable depreciation.
Ueda highlighted the dual effects of a weakened yen on the economy, citing increased import expenses and shifts in consumer demand for goods and services.
Despite the Bank of Japan's preference for indirect regulation of the yen via monetary policy, vigilance will be maintained concerning the potential significant consequences of currency fluctuations on economic conditions and price dynamics.
Expressing concerns over the current currency volatility, Ueda cautioned about its potential amplified influence on inflation, particularly amid heightened wage and price-setting activities.
Recognizing the possibility of necessitating a monetary response to substantial exchange rate fluctuations, he acknowledged the potential repercussions on the economy and price levels.
Ueda's statements following the Bank of Japan's recent monetary policy meeting fueled market anticipation that the central bank will persist with its low-interest-rate strategy, further driving down the value of the yen.
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