BOJ’s Ueda Signals Persistent Low Inflation at ECB Forum

On July 1, 2025, at 5:55 PM EEST, Bank of Japan (BOJ) Governor Kazuo Ueda provided critical insights into Japan’s economic landscape during a panel discussion at the European Central Bank’s Forum on Central Banking in Sintra, Portugal. Addressing an audience of global financial leaders, economists, and policymakers, Ueda stated that Japan’s underlying inflation remains “somewhat below” the BOJ’s 2% target, signaling ongoing challenges in achieving the central bank’s long-standing goal. His remarks, delivered alongside central banking heavyweights like Jerome Powell and Christine Lagarde, underscored the complexities of Japan’s monetary policy in a global environment marked by volatility and uncertainty.

Ueda’s comments highlighted the persistent struggle to lift Japan’s inflation to the desired 2% threshold, a target the BOJ has pursued for years to combat decades of deflationary pressures. He noted that despite recent progress, core inflation metrics—excluding volatile items like food and energy—continue to fall short, reflecting weak domestic demand and structural economic challenges. Speaking on the panel themed “Adapting to Change: Macroeconomic Shifts and Policy Responses,” Ueda emphasized the need for cautious policy adjustments to stimulate inflation without destabilizing Japan’s fragile economic recovery. His remarks come amid growing scrutiny of the BOJ’s ultra-loose monetary stance, with markets closely monitoring potential shifts in policy direction.

In addition to inflation, Ueda addressed the BOJ’s neutral interest rate, which he described as having a “very large” range of estimates, indicating uncertainty in pinpointing the rate that neither stimulates nor restrains economic growth. He acknowledged that the BOJ’s current policy rate remains “below neutral,” suggesting that monetary policy is still accommodative but may require recalibration as economic conditions evolve. This candid assessment, made during a live-streamed session moderated by Bloomberg’s Francine Lacqua, reflects the delicate balancing act central banks face globally.

Ueda’s remarks at the Sintra Forum, a pivotal gathering akin to the Federal Reserve’s Jackson Hole symposium, highlight Japan’s unique economic challenges and their implications for global monetary policy coordination.