By Makiko Yamazaki and Kentaro Sugiyama
TOKYO (Reuters) -Bank of Japan Governor Kazuo Ueda said he discussed various topics on the economy and markets, including foreign exchange rate moves, in a meeting with Prime Minister Shigeru Ishiba on Wednesday.
“It’s desirable for currency rates to move stably, reflecting fundamentals,” Ueda told reporters after meeting with Ishiba, adding the central bank would scrutinise currency moves while communicating closely with the government.
Ueda said exchange rates came up as part of broader talks on economic and market developments, but declined to elaborate on what was discussed.
On monetary policy, Ueda said there was no change to the BOJ’s readiness to continue raising interest rates if the economy and prices move in line with its projections.
“We’d like to scrutinise without any pre-conception” whether the BOJ’s projections would materialise, he added.
The meeting between Ueda and Ishiba was the first since February, which is a regular exchange of views on the economy and markets held several times a year.
Ueda’s remarks followed those by BOJ Deputy Governor Ryozo Himino on Tuesday warning of lingering global uncertainty, which weakened the yen as some investors saw the comments as less hawkish than expected.
The BOJ exited a massive, decade-long stimulus last year and raised short-term rates to 0.5% in January on the view Japan was on the cusp of sustainably achieving its 2% inflation target.
With inflation exceeding the BOJ’s 2% target for well over three years, Ueda has signaled the bank’s readiness to keep raising borrowing costs.
Nearly two-thirds of economists polled by Reuters in August expect the BOJ to raise rates again later this year.
Some analysts warn that political uncertainty may complicate the BOJ’s decision on how soon to hike rates. Ishiba has faced growing calls to step down after his ruling Liberal Democratic Party’s (LDP) bitter loss in an upper house election in July.
The LDP is expected to decide next week whether to hold a leadership race to replace Ishiba, who has given quiet consent to the BOJ’s exit from ultra-easy policy.
(Reporting by Makiko Yamazaki and Kentaro Sugiyama; Writing by Leika Kihara; Editing by Chang-Ran Kim and Sam Holmes)
