Bank of Japan press conference — 30 October 2025

What this says

Regarding today's meeting, first, we decided by majority vote to maintain the guideline for money market operations of encouraging the uncollateralized overnight call rate to remain at around 0.5 percent. Member Takata proposed raising the policy interest rate to around 0.75 percent, on the grounds that the norm of prices not rising has shifted and the achievement of the price stability target has generally been realized, and Member Tamura also proposed raising it to around 0.75 percent, on the grounds that upside risks to prices are growing and that we should move somewhat closer to the neutral interest rate, but these proposals were rejected by majority vote.

As for prices, the year-on-year rate of change in the consumer price index (CPI, all items less fresh food) is at around 3 percent for the time being, due to the effects of rising prices of food items such as rice, while the pass-through of wage increases to selling prices continues. As for the outlook, as the effects of rising prices of food items such as rice diminish, the year-on-year rate of change in the CPI (all items less fresh food) is expected to shrink its positive range to a level below 2 percent toward the first half of next fiscal year.

However, as the mechanism in which wages and prices rise moderately while referencing each other is maintained, and thereafter, as the growth rate rises and labor shortages intensify and medium- to long-term inflation expectations rise, both the underlying rate of inflation and the rate of increase in the CPI (all items less fresh food) are expected to gradually increase, and are projected to be at levels generally consistent with the price stability target in the latter half of the projection period.

As for the risk balance of the economic outlook, in light of the impact of various countries' trade policies and other factors, downside risks are considered to be larger for fiscal 2026.

In conducting monetary policy, given that the current real interest rate is at a very low level, if the economic and price outlook described above is realized, we believe that we will continue to raise the policy interest rate and adjust the degree of monetary accommodation in accordance with improvements in economic and price conditions.

As for Japan's consumer prices, so far, while the effects of rising food prices are diminishing, they have been moving in line with the central projection that the underlying rate of inflation will rise moderately, and we do not recognize that concern about falling behind the curve is currently increasing.

We do not have any preconception at this point about whether or when to raise rates.

I think there is insufficient material to state a forecast for next spring's wage negotiations now, but for the time being, I would like to limit myself to saying that we expect it to be around this year's spring wage negotiation result plus or minus alpha.

As we always say, we will formulate economic and price outlooks properly, and as the probability of their realization—currently, the probability of their realization—rises, we will adjust the policy interest rate as appropriate and adjust the degree of monetary accommodation, aiming to achieve the 2 percent price stability target in a sustainable and stable manner.

At this meeting, as in the previous September meeting, two members proposed a rate hike, and seven opposed it.

First, regarding consumption: wages are rising to some extent, but as I have said before, due in part to the high inflation rate centered on food products, consumption has been weak, mainly in non-durable consumer goods. Recently, there may also be some spillover of that into services such as dining out.

Second, regarding the neutral rate: as I believe I mentioned somewhere last time as well, unfortunately the situation continues in which we cannot pin down the neutral rate or terminal rate except with a range, due to uncertainty about the neutral rate, and although we continue our analysis, we have not yet been able to narrow that range any further than before.

First, regarding the reason we left interest rates unchanged even as the macro picture appears to show some slight improvement: this is somewhat repetitive, but uncertainty surrounding the overseas economy — especially the U.S. economic outlook, or global trade policy trends — or especially uncertainty regarding their economic impact, as I mentioned briefly earlier, I think the downside risks are becoming somewhat more limited, but they still persist.

Under such circumstances, what we are focusing on for the time being — this too is repetitive — is what stance labor and management will take in next year's spring wage negotiations. Including this, the reason we decided to keep policy unchanged this time is that we want to see a bit more data.

Also, regarding whether there was support or opposition to the wording of the projections: regarding the basic views, of course we discuss them together and take positions for and against each time, and as I mentioned earlier, this time there was opposition to some parts.

Then, I believe your question was about differences among Board members in their image of future policy rate hikes or the policy rate path. There are aspects I myself do not fully grasp, and I think you should look at the Summary of Opinions or the minutes for this.

Still, I would like to carefully watch the spillover of food price increases into inflation expectations, and there may be cases where inflation expectations rise, and as came up a little earlier, there is also the possibility that high food prices have a negative impact on consumption and create an effect in the opposite direction, so I think we need to monitor both.

I am not saying that we want to wait until we know the final wage increase rate agreed in the spring wage negotiations. What I am saying is that I want to gather a bit more information on what the initial momentum feels like.

As for budget compilation and policy: even in the middle of budget compilation, I think it is entirely possible to incorporate into the outlook what policies are likely to be decided, or are in the process of being decided, and to change policy depending on the circumstances.

The reason we left interest rates unchanged today is, to repeat, that with high uncertainty surrounding the overseas economy and so on, we want to see a bit more data, especially on whether proactive wage-setting behavior in Japan will be maintained. If we are satisfied on that point, then regardless of the political situation, we will adjust interest rates, I believe.

o repeat, that with high uncertainty surrounding the overseas economy and so on, we want to see a bit more data, especially on whether proactive wage-setting behavior in Japan will be maintained. If we are satisfied on that point, then regardless of the political situation, we will adjust interest rates, I believe.

In conclusion, as I mentioned briefly earlier, and I apologize for repeating myself, we are not thinking that we must look at the entirety of the spring wage negotiations, but rather we want to confirm the initial momentum. And before that, as you just mentioned, what corporate earnings will look like — especially now that the tariff rate, for automobiles for example, has settled from over 25% to around 15% — what the FY2025 earnings forecast will look like is also an important factor, I think.

I am not sure whether I can explain this well, but the important focus is that we want to see the first movements of the spring wage negotiations. Whether, by the time we can make that judgment, for example, negative news coming from the United States that is larger than what we currently foresee will emerge — that is how we would like to monitor the situation.

That said, especially for ordinary people, when high inflation occurs — 10% or 20% — the real value of cash that they must hold, and deposits with limited interest, declines, and I think this is a very serious problem. Ensuring that this does not happen — achieving price stability — is, I believe, the normal policy conduct stance of a central bank.

Transcript

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October 31, 2025 Bank of Japan

Governor's Press Conference — From 3:30 p.m. on Thursday, October 30, 2025, for approximately 60 minutes

(Q) Please explain the contents of today's Monetary Policy Meeting, including the contents of the Outlook Report.

(A) Regarding today's meeting, first, we decided by majority vote to maintain the guideline for money market operations of encouraging the uncollateralized overnight call rate to remain at around 0.5 percent. Member Takata proposed raising the policy interest rate to around 0.75 percent, on the grounds that the norm of prices not rising has shifted and the achievement of the price stability target has generally been realized, and Member Tamura also proposed raising it to around 0.75 percent, on the grounds that upside risks to prices are growing and that we should move somewhat closer to the neutral interest rate, but these proposals were rejected by majority vote.

Today we published the Outlook Report, so I will explain the current situation and outlook for economic activity and prices in line with it. As for the current state of Japan's economy, we judged that it has been recovering moderately, although some weak movements have been seen. As for the outlook, amid the impact of various countries' trade policies and other factors, overseas economies will decelerate, and while firms' profits in Japan will be pushed down, accommodative financial conditions and other factors will act as supporting factors, but the growth pace is expected to struggle to increase. Thereafter, as overseas economies return to a moderate growth path, the growth rate is expected to rise. Compared with the previous Outlook Report, the growth rate projections are generally unchanged. As for prices, the year-on-year rate of change in the consumer price index (CPI, all items less fresh food) is at around 3 percent for the time being, due to the effects of rising prices of food items such as rice, while the pass-through of wage increases to selling prices continues. As for the outlook, as the effects of rising prices of food items such as rice diminish, the year-on-year rate of change in the CPI (all items less fresh food) is expected to shrink its positive range to a level below 2 percent toward the first half of next fiscal year. During this period, the underlying rate of increase in consumer prices is expected to struggle to increase, affected by the growth pace and other factors. However, as the mechanism in which wages and prices rise moderately while referencing each other is maintained, and thereafter, as the growth rate rises and labor shortages intensify and medium- to long-term inflation expectations rise, both the underlying rate of inflation and the rate of increase in the CPI (all items less fresh food) are expected to gradually increase, and are projected to be at levels generally consistent with the price stability target in the latter half of the projection period. Compared with the previous Outlook Report, the price projections are generally unchanged. As risk factors surrounding these projections, there are various ones, but in particular, uncertainty regarding overseas economic and price developments affected by various countries' trade policies and other factors remains high, and it is necessary to pay sufficient attention to their impact on financial and foreign exchange markets and on Japan's economy and prices. As for the risk balance of the economic outlook, in light of the impact of various countries' trade policies and other factors, downside risks are considered to be larger for fiscal 2026. As for the risk balance of the price outlook, as in the previous Outlook Report, it is considered to be generally balanced on the upside and downside.

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Regarding the Outlook Report, Member Takata submitted a proposal stating, among other things, that consumer prices are already at a level that generally achieves the price stability target, and Member Tamura submitted a proposal stating, among other things, that the underlying rate of inflation will be at a level generally consistent with the price stability target from the middle of the projection period onward, and each was rejected.

Next, regarding the conduct of monetary policy going forward. In conducting monetary policy, given that the current real interest rate is at a very low level, if the economic and price outlook described above is realized, we believe that we will continue to raise the policy interest rate and adjust the degree of monetary accommodation in accordance with improvements in economic and price conditions. In addition, as for whether such an outlook will be realized, given that uncertainty regarding the impact of various countries' trade policies and other factors remains high, we believe it is important to carefully confirm domestic and overseas economic and price conditions and financial market developments, and to make judgments without preconceptions. The Bank of Japan, under the 2 percent price stability target, will conduct monetary policy appropriately in accordance with economic, price, and financial conditions, from the perspective of achieving its sustainable and stable realization.

(Q) I have two questions. First, you have so far cited three points to examine regarding economic and price conditions. These are the developments of the global economy including the United States, the impact of tariff policies on corporate profits and wages, and price developments including food prices. At this Monetary Policy Meeting, regarding each of these, what parts of uncertainty remain in making the judgment, and how much time do you think will be needed going forward to determine whether the environment is one in which a rate hike is possible? At this point, amid continuing price increases, please also tell us whether you have any concern about falling behind the curve.

Second, the Takaichi administration was launched this month. Prime Minister Takaichi has stated that the responsibility for deciding the direction of monetary policy lies with the government, and she is regarded as placing importance on monetary easing. How do you intend to communicate with the new administration going forward? Also, Governor Ueda, you met with former Prime Minister Ishiba last year on the day after your inauguration, but do you have plans to meet with Prime Minister Takaichi soon as well?

(A) Starting with the first question, regarding the economic and price outlook in this Outlook Report, both are largely unchanged from the previous Outlook Report, and we judge that the probability of the central projections being realized is gradually increasing. On that basis, first, regarding the developments of the U.S. economy, the impact on employment and income formation through the deterioration of corporate profits due to tariffs, and the impact on private consumption through the pass-through of tariff costs to prices, are expected to gradually become clear going forward. However, since these points may not become clear for the time being, I think we will make judgments while anticipating the overall picture of the economy based on information obtained sequentially. Next, regarding the impact of tariff policies on Japan's economy, in this regard, even under the downward pressure on profits from tariff policies, we would like to confirm a little more whether firms' proactive wage-setting behavior will not be interrupted. Going forward, under profit plans premised on a 15 percent tariff rate, labor and management's policy stance toward next year's spring wage negotiations will become clear, and hearing information through our head office and branches will also accumulate as needed. Using these, we would like to analyze firms' wage-setting stance and specific wage developments, and confirm whether the mechanism in which wages and prices both rise moderately will be maintained. As for Japan's consumer prices, so far, while the effects of rising food prices are diminishing, they have been moving in line with the central projection that the underlying rate of inflation will rise moderately, and we do not recognize that concern about falling behind the curve is currently increasing. We will continue to examine, in addition to underlying price movements, whether risks of prolonged rises in food prices leading to upside or downside deviations in prices overall will materialize. As the Bank of Japan, focusing on the points I have just mentioned, we will appropriately judge policy at each Monetary Policy Meeting while confirming the probability and risks of the central economic and price outlook, as before. We do not have any preconception at this point about whether or when to raise rates.

Regarding the latter part of your question, I will refrain from commenting on the Prime Minister's remarks or on plans for a meeting with the Prime Minister. As for us, in order to fulfill our mission of price stability, we will continue to conduct monetary policy aiming at the sustainable and stable realization of the 2 percent price stability target. In doing so, as stipulated in the Bank of Japan Act, we recognize that it is necessary to always maintain close contact with the government and to communicate sufficiently. In fact, we have been communicating with the government through various occasions and at various levels. Since my inauguration as Governor, I myself have met with the Prime Minister on opportunities and exchanged views on financial and economic conditions. Also, at each Monetary Policy Meeting, we hear the opinions of those attending from the government regarding economic and price conditions and monetary policy conduct, and from the Bank of Japan's side as well, we participate in various meetings held by the government and express our views on financial and economic conditions. Going forward as well, we would like to communicate sufficiently with the government as before.

(Q) I have two questions. There is some overlap with the questions from the moderator, but you mentioned that next year's spring wage negotiations will be important in assessing the domestic impact of tariff policies. Based on the current data and projections, if things proceed as they are, what kind of result do you currently expect for wage increases? Also, if there are any industries or sectors you are particularly watching, please tell us as well.

Earlier, you said that the probability toward a rate hike is gradually increasing, but compared with the previous September meeting, from what points do you think the probability has increased? Also, how much distance do you think remains until a rate hike?

(A) I think there is insufficient material to state a forecast for next spring's wage negotiations now, but for the time being, I would like to limit myself to saying that we expect it to be around this year's spring wage negotiation result plus or minus alpha. However, if I may speak in terms of sectors, I would like to carefully watch the manufacturing sector, where the impact of tariffs has already exerted downward pressure on profits in particular, and within that, the automobile-related sector.

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Then, I believe your question was about the basis for saying that the probability of the outlook has increased. This is an abstract way of putting it, but roughly speaking, for example, there was first the outlook formulated in July, and then when we formulated the outlook again using the data that came in over the following three months, it turned out to be almost the same shape, so we judged that the probability of the outlook so far has increased.

(Q) I also have two questions. First, overlapping somewhat with the opening question, I believe you cited the developments of the U.S. economy as one of your points to examine. However, at present, due to the government shutdown, the publication and collection of economic statistics have stopped, and I think it is difficult to grasp the actual state of the U.S. economy. This morning, I believe, Fed Chair Powell compared the current situation to driving in fog. Governor, how do you perceive the current difficulty of forecasting the U.S. economy, and do you think that, until the publication of reliable economic data resumes, the Bank of Japan will also find it difficult to move on policy judgments, especially a rate hike?

Another question. In connection with this week's visit to Japan, I believe Treasury Secretary Bessent referred multiple times to the Bank of Japan's monetary policy. In terms of content, many commentaries see it as encouraging the Bank of Japan to raise rates, but as Governor, do you take this as something that gives a push to a rate hike, or, since it takes the form of intervention from abroad, as something like an unwelcome favor? Please tell us how you take it.

(A) Regarding the U.S. economy, there may be another question later, but to speak a little in detail, so far I believe a resilient situation has continued. As background, one point is that the strength of AI and other factors was greater than expected, and another is that the impact of tariffs, to put it simply, has been appearing slowly, or has only been appearing slowly, and furthermore has been delayed considerably. However, since we expect the pass-through of tariffs to consumers to proceed further going forward, I have always said that there is a risk that the negative impact on consumption and the economy will become larger than before. I also see that some negative impact has already appeared on employment and on capital investment other than AI. However, even if the pass-through of tariffs to consumers proceeds going forward, I believe it will proceed gradually, so in a sense, the downside risks to the U.S. economy going forward have somewhat declined compared with around July. Even so, the Fed this morning cut rates out of consideration for employment risks and downside risks. As you said, there is also the government shutdown, and we would like to proceed while confirming whether negative news beyond expectations will emerge going forward.

Then, the second one, I believe, was a question about the relationship between the government shutdown and our policy decisions, is that right?

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(Q) Secretary Bessent.

(A) Regarding Secretary Bessent's remarks, I would like to refrain from commenting directly. As we always say, we will formulate economic and price outlooks properly, and as the probability of their realization—currently, the probability of their realization—rises, we will adjust the policy interest rate as appropriate and adjust the degree of monetary accommodation, aiming to achieve the 2 percent price stability target in a sustainable and stable manner.

(Q) I also have two requests. At this meeting, as in the previous September meeting, two members proposed a rate hike, and seven opposed it. Compared with the previous September meeting, please tell us whether the views of the two members—which I believe are similar to those in September—are gaining understanding among the Board members, including yourself.

The second point is that you recognize there is no risk of falling behind the curve, but does that mean you believe there is no need to hurry on a rate hike and that you can judge slowly?

(A) I believe your question is about the distance between the views of the two who opposed and those of the others. For details, I would like you to look at the minutes

I believe it is possible that there could be a case for a rate hike.

(Q) I believe your stance is cautious about raising rates because underlying inflation has not reached 2%. However, you raised rates in January of this year, bringing the policy rate to 0.5%, a 30-year high. At present, with neither the economy nor prices showing signs of overheating, if the next rate hike brings the policy rate to 0.75%, I think various effects could be a concern — including effects on the economy, financial markets, and economic activity. Among these, with regard to achieving the 2% stable and sustainable price target, if possible I would like to ask about the risk you are most attentive to, or most worried about. Thank you.

(A) Regarding the risk I am most worried about among the effects that would arise if we raise rates — I worry about various things, but let me just say that I am not currently identifying one particular thing as the most important and deciding to focus my thinking on that.

(Q) I have two questions. The first is about consumption. Although wages are relatively firm, consumption is still struggling to grow, and some say it may remain weak going forward. While risks in the overseas economy are being noted, how are you viewing the outlook for domestic demand, especially consumption, with a focus on the future? And how would that affect your decision on raising rates? That is the first point.

The second point is not so much about the next rate hike but about the longer-term path of the BOJ's normalization. If the 2% price target is achieved in the latter half of the projection period in the Outlook Report, and upside risks to prices are being noted, how do you think about the level of the policy rate that should inherently prevail? With real interest rates still deeply negative, a rate hike would not end at 0.75% or 1%, and there are moves in the market beginning to price in a terminal rate of 1.25%. Although how far you will raise rates in the future depends on economic and price conditions, please share your view on the image of the future policy rate path and the normalization rate path, in order to deepen the market's understanding.

(A) First, regarding consumption: wages are rising to some extent, but as I have said before, due in part to the high inflation rate centered on food products, consumption has been weak, mainly in non-durable consumer goods. Recently, there may also be some spillover of that into services such as dining out. That said, on the whole, for example, consumer sentiment has improved slightly recently, so I view consumption as firm. As one factor that will determine future consumption when looking ahead, what we are paying attention to, as I mentioned at the outset, is how much wages will rise going into next year's spring wage negotiations.

Second, regarding the neutral rate: as I believe I mentioned somewhere last time as well, unfortunately the situation continues in which we cannot pin down the neutral rate or terminal rate except with a range, due to uncertainty about the neutral rate, and although we continue our analysis, we have not yet been able to narrow that range any further than before.

(Q)

First, regarding today's policy decision: from a macroeconomic standpoint, the environment appears sufficient to proceed with a rate hike, but please tell me again the reason you held off. I think there were various things domestically and internationally — for example, that sufficient materials to quantify such uncertainty were not available, or that you placed weight on risks not yet visible on the surface regarding the financial system. Please tell me specifically what the reasons were.

And a related point: regarding this Outlook Report, please tell me whether the projections and wording reflect a consensus among the Policy Board members.

Then, a separate matter: I am sorry to ask about stablecoins again, but stablecoins are now being issued in Japan as well, and moves to consider issuing them are spreading among major banks. Forms of digital currency such as tokenized deposits are also drawing attention. How do you view the current moves surrounding private digital currencies? Also, regarding Japan, is there a sense of being behind in regulation and infrastructure development? This may not be limited to this field, but I would like to ask about the risk of falling behind.

(A) First, regarding the reason we left interest rates unchanged even as the macro picture appears to show some slight improvement: this is somewhat repetitive, but uncertainty surrounding the overseas economy — especially the U.S. economic outlook, or global trade policy trends — or especially uncertainty regarding their economic impact, as I mentioned briefly earlier, I think the downside risks are becoming somewhat more limited, but they still persist. Under such circumstances, what we are focusing on for the time being — this too is repetitive — is what stance labor and management will take in next year's spring wage negotiations. Including this, the reason we decided to keep policy unchanged this time is that we want to see a bit more data.

As for stablecoins, the first yen-denominated stablecoin has just been issued, and institutionally, compared with other countries, Japan has had the legal framework in place for about two years, and within that framework the first one has finally appeared. Given that, as for how I view the current situation: I would like to carefully assess, after ensuring proper handling of cyber risks and anti-money-laundering measures, what kinds of use cases will spread, including for the coin that has just been issued. However, if this reaches a state where circulation becomes extremely large, for example it could compete with deposit currency, which is the core of the payment system, and that would lead to the question of how the entire payment system might change. Of course, while keeping that in mind as well, I intend to monitor developments, but I view this as still being at an early stage.

Also, regarding whether there was support or opposition to the wording of the projections: regarding the basic views, of course we discuss them together and take positions for and against each time, and as I mentioned earlier, this time there was opposition to some parts.

(Q) Two questions, please. The first is about the exchange rate. Of course I believe you will refrain from commenting on levels, but the yen has been weakening and has recently been weakening further. Please tell me how this affects the economy and prices.

The second point is that you, Governor, and two Board members have expressed the view that rates should be raised. The Board shares the policy of raising rates, but listening to what you say, Governor, I get a fairly cautious impression. Even if the direction is the same, is there quite a large gap within the Board? Regarding the thinking on when to raise rates. Please address that point.

(A) First, the exchange rate. We do not comment on short-term movements, and it is desirable for the exchange rate to move stably in line with fundamentals. As for the impact of fluctuations on the economy and prices, this is also an abstract way of putting it, but we always think we want to carefully examine the impact on the economy and prices, including the factors behind the exchange-rate moves.

Then, I believe your question was about differences among Board members in their image of future policy rate hikes or the policy rate path. There are aspects I myself do not fully grasp, and I think you should look at the Summary of Opinions or the minutes for this.

(Q) Let me ask just one question. It concerns the relationship between food products and consumption that has come up repeatedly. Regarding the continued high prices of rice and food products — not only the rate of increase but the fact that they remain at a high level — please tell me how you think this affects people's expected inflation rates, or your view on the argument that it is already pushing down consumption considerably.

(A) It has been an empirical rule that food price movements have a fairly strong impact, especially on households' short-term inflation expectations, and I think recent data show the same. However, as for whether it has a similarly large impact on households' medium- to long-term inflation expectations or on other actors' medium- to long-term inflation expectations — for example, looking at firms or the medium- to long-term part of consensus forecasts — I do not think the situation is that they have risen enormously along with food inflation. Still, I would like to carefully watch the spillover of food price increases into inflation expectations, and there may be cases where inflation expectations rise, and as came up a little earlier, there is also the possibility that high food prices have a negative impact on consumption and create an effect in the opposite direction, so I think we need to monitor both.

(Q) One point about wage increases: Governor, you said earlier that, toward the next rate hike, you will watch whether firms' proactive wage-setting behavior continues. Regarding wage increases as well, I think there is a tendency for them to gradually spread to rural areas, and for rural areas to lag and show greater dispersion in wage increases, between urban areas with many large firms and rural areas with many small and medium-sized firms. As you watch the next spring wage negotiations, please tell me your thoughts on how you will view the balance between rural and urban areas and between large firms and small and medium-sized firms.

(A) This is a very important point, and dispersion across firm sizes and across regions is something we always watch carefully. As our most important source of information on this point, we hold a branch managers' meeting once a quarter, so we obtain the freshest information from each region of Japan through the branch managers. Through such opportunities and continuously in various forms between them as well, information comes in, so I would like to make efforts to gather information using this information network.

(Q) This is a follow-up question about the message from Secretary Bessent that came up earlier. First, during the BOJ's two-day Monetary Policy Meeting, did any participant make any reference to Mr. Bessent's remarks?

And the second point: is there any possibility that the BOJ will take into account the intentions or views of the U.S. government in deciding monetary policy going forward? Those are my two points.

(A) We do not comment on individual remarks at the Policy Board meetings, so I will refrain from doing so. I think you should look at the minutes or the Summary of Opinions.

As for future policy conduct, this is repetitive, but our stance is to conduct appropriate monetary policy calmly, based on the outlook for economic activity and prices and the degree of confidence in that outlook.

(Q) Governor, you have been saying that the degree of confidence in the realization of the outlook has risen, but that you want to confirm a bit more data before adjusting the degree of easing. In particular, you have said you want to confirm data on the stance of labor and management toward the spring wage negotiations. Regarding the spring wage negotiations, Rengo announced its basic policy the other day seeking wage increases of 5% or more. Currently, I believe management is considering its position. Is there a possibility that, by the next meeting in December, enough data will be available to judge whether to raise rates? Please share your thinking on that.

Relatedly, some people argue that December is the season for compiling the national budget, making it difficult to change policy. What do you think about that, Governor?

(A) Regarding developments in the spring wage negotiations and how much information will be gathered by December: I am not saying that we want to wait until we know the final wage increase rate agreed in the spring wage negotiations. What I am saying is that I want to gather a bit more information on what the initial momentum feels like.

As for budget compilation and policy: even in the middle of budget compilation, I think it is entirely possible to incorporate into the outlook what policies are likely to be decided, or are in the process of being decided, and to change policy depending on the circumstances.

(Q) I would like to ask about AI, which has come up in questions earlier. The IMF has also analyzed that the investment boom is leading to higher stock prices and boosting personal consumption, and in Japan stock prices have risen very sharply. How do you view this, and do you have any intention to preemptively raise rates to curb such overheating? Please tell me.

(A) This overlaps somewhat with what I said earlier, but if it is true, as expected, that productivity will rise in the future due to AI investment, then it is an entirely natural phenomenon that current stock prices rise in anticipation of that future productivity increase, and that the consumption of people who hold stocks rises because of the stock price increase. I think this means that we are obtaining from the present the fruits of future increases in productivity, GDP, and income. However, if those expectations are excessively optimistic, then an adjustment will occur. And in relation to policy, we are not considering policy responses such as trying to suppress a specific stock price level with a rate hike because it is excessive.

(Q) Last time, in relation to the current question, I asked whether this might be a bubble. In this Outlook Report, you have written that attention needs to be paid to asset price movements. Under such circumstances, regarding your decision to hold off on a rate hike this time, many market participants take it as meaning you held back because it was right after the Takaichi administration was launched. After today's announcement, following the announcement of the hold, the yen fell by nearly 1 yen and then rose again, and the Nikkei average plunged by about 600 yen and then recovered, and then fell again; in the afternoon, after the announcement, there was very large volatility with sharp swings. This seems to express concern about a stance of holding back out of consideration for politics. If Prime Minister Takaichi were to oppose a rate hike, does the BOJ have the resolve to go ahead with a rate hike anyway?

(A) The reason we left interest rates unchanged today is, to repeat, that with high uncertainty surrounding the overseas economy and so on, we want to see a bit more data, especially on whether proactive wage-setting behavior in Japan will be maintained. If we are satisfied on that point, then regardless of the political situation, we will adjust interest rates, I believe.

(Q) One question, please. This marks the sixth consecutive meeting at which the policy rate has been

Situation assessment was, I think, relatively good figures. Regarding the June Tankan as well, it seemed that the tariff impact has not yet appeared, and again this time it has not appeared much. After this, in November there will be interim earnings announcements for large corporations, and after that earnings forecasts will be revised, and based on that, I think it will become considerably clearer how much profit will be available as a source for wage increases. At the previous rate hike in January of this year as well, I believe the hike was made in January after confirming wage increases, with the desire to confirm wage increases. Next, regarding the confirmation of wage increases as well — whether confirmation can be done along the same path as the previous rate hike, or given the current outlook, whether it can be done a bit earlier, or conversely whether it will take a bit longer — please tell us how you are thinking at this point in time.

(Answer) In conclusion, as I mentioned briefly earlier, and I apologize for repeating myself, we are not thinking that we must look at the entirety of the spring wage negotiations, but rather we want to confirm the initial momentum. And before that, as you just mentioned, what corporate earnings will look like — especially now that the tariff rate, for automobiles for example, has settled from over 25% to around 15% — what the FY2025 earnings forecast will look like is also an important factor, I think.

(Question) This may be a confirmation of what you have said so far, but regarding the impact of future tariff policy — is it correct to understand that further reduction of uncertainty about the U.S. economic outlook itself is no longer necessary for the rate hike decision, and that the focus is shifting toward the initial momentum of next year's domestic wage increases?

(Answer) I am not sure whether I can explain this well, but the important focus is that we want to see the first movements of the spring wage negotiations. Whether, by the time we can make that judgment, for example, negative news coming from the United States that is larger than what we currently foresee will emerge — that is how we would like to monitor the situation.

(Question) I would like to ask about housing investment or asset prices. This time, regarding housing investment, I believe the expression has been changed from "somewhat weak" to "decreasing." What is the background for this? Is it that the Bank of Japan's monetary policy, as a result of rate hikes, has caused it to weaken somewhat — in other words, a normal path — or is it that real estate prices have risen too much and that effect is now showing? If so, including stock prices, it seems there may be somewhat bubble-like elements in real estate prices — how do you view this?

(Answer) Regarding housing investment, the exact timing is a bit unclear, but this spring the Building Standards Act, was it, became stricter, and before that, anticipating this, there was a lot of rush demand. I believe we are now in a phase where the reaction to that is appearing.

(Question) I would like to ask about the sense of distance between the Bank of Japan and politics. It has been 27 years since the new Bank of Japan Act, which is said to have enhanced the BOJ's independence, came into effect, but as far as I can see, the sense of distance from politics does not appear to have changed much from under the old Bank of Japan Act. If Governor Ueda's view differs from this, I would very much like to hear it, and I would also like to hear Governor Ueda's thoughts on why the Bank of Japan's independence is necessary in the first place.

(Answer) I was not involved in policy decisions during the old law era, so I do not have a firsthand sense of how things differ from now, but under the revised Bank of Japan Act, Article 3 I believe, it states that the autonomy of monetary control must be respected, and I believe independence is properly guaranteed legally. As for the latter part.

(Question) Why is independence necessary?

(Answer) I will answer this in general terms, but in a sense monetary policy is also public policy, so there is an aspect where it would be more efficient to conduct it while coordinating with other policies. However, especially in the case of monetary policy, because of policy lags and other issues, it is necessary to properly consider and anticipate the very long-term picture and implement policy accordingly. In that context, making decisions simultaneously with other policies, which tend to be influenced by elections and relatively short-term perspectives, does not necessarily produce desirable results — and from this, I believe the wisdom emerged to give central banks autonomy, particularly over the means of monetary policy or interest rate adjustment.

(Question) I would like to ask about real interest rates and income distribution. Currently real interest rates remain extremely low, and in particular the purchasing power of deposits is being eroded. I understand that the central bank, under independence, is an entity that conducts monetary policy on the premise that it does not affect income distribution in the long run. How does the Governor perceive the current situation? For example, is the distributional effect staying within a range that cancels out on average over the long term, or is the BOJ within the realm of democracy because it coordinates with the government? Please share your thoughts on the current state of the distributional effects of monetary policy.

(Answer) Monetary policy affects asset prices, including interest rates, and through that, I think it cannot be denied that there is an aspect where it also affects the distribution of income and assets. However, while we will proceed with attention to what kind of distributional effects are arising, we are not setting policy objectives in a way that aims to make distribution equal. That said, especially for ordinary people, when high inflation occurs — 10% or 20% — the real value of cash that they must hold, and deposits with limited interest, declines, and I think this is a very serious problem. Ensuring that this does not happen — achieving price stability — is, I believe, the normal policy conduct stance of a central bank.

(Question) Earlier, Governor, you explained to the effect that downside risks to the U.S. economy have somewhat

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