BoJ Governor Kazuo Ueda told parliament today that the central bank remains committed to raise interest rate if underlying inflation is deemed to be approaching its 2% target.
He emphasized that BoJ’s objectives remain squarely focused on price stability, and that its approach to policy “would not be disturbed by considerations for the BoJ’s finances.”
Ueda’s remarks come as concerns mount over the BoJ’s balance sheet in light of interest rate hikes and volatility in equity markets.
BoJ estimated in December that if short-term borrowing costs were to rise to 2%, it could incur losses of up to JPY 2 trillion.
Additionally, Ueda noted that a 1000-point drop in the Nikkei 225 index would translate into a valuation loss of about JPY 1.8 trillion in its ETF holding.
While these figures highlight the scale of financial risks, Ueda’s insistence on prioritizing price stability signals that BoJ is prepared to weather market volatility in pursuit of its monetary policy mandate.
