BoJ Governor Ueda (post-policy presser) says, must pay attention to even small FX moves as underlying inflation approaches 2%

• On JGBs, says, must be mindful of the fact that demand-supply of super-long JGBs have been unstable due to end-FY factors.

• Will place larger focus on underlying inflation in making policy decisions.
• On average, the Board still thinks there is some distance to the 2% inflation target.
• Compared to October, likelihood of achieving 2% target heightening; but, compared to December the likelihood is not that different.
• Are hearing more voices that price hikes are reflecting wage growth. 

Governor Ueda’s comments indicate a nuanced approach from the BoJ as they navigate inflation dynamics. Attention to even small FX shifts signals a potential for increased volatility in JPY and markets sensitive to Japanese monetary policy, especially if inflation is perceived as nearing the target. The mixed signals regarding the timeline to reach the 2% target suggest that while the BoJ is increasingly aware of inflation trends, they remain cautious about immediate policy adjustments.