BOJ's Ueda says underlying inflation is 'quite close' to 2%: what it means for the October 30 meeting and the yen

Bank of Japan Governor Kazuo Ueda told parliament on Monday, October 19, 2026, that Japan's underlying inflation is "quite close" to the central bank's 2% target, pushed up by strong global demand tied to artificial intelligence and a tight labor market. The yen barely reacted: in MoveSurge's one-minute data, the dollar was at 157.787 yen before his remarks on wages and prices crossed at 00:08 UTC and at 157.822 fifteen minutes later, a 0.02% rise.

Three days earlier, on Friday, October 16, Ueda said the BOJ cannot tolerate underlying inflation rising further once it is around 2%, so Monday's remarks put that condition for more rate increases close to being met. The BOJ's policy rate is 1.25% after a hike in September, and its next meeting ends on October 30.

What Ueda said on October 19

• Underlying inflation is "quite close" to 2%, helped by AI-driven demand that lifts business investment, exports and goods prices, and by a tight job market.
• Keeping inflation anchored around 2% is "becoming more important." Wage gains and the recovery in prices are reinforcing each other.
• The Middle East conflict is raising energy prices and other supply-driven inflation.
• If the BOJ fails to adjust its policy rate properly, worries about inflation could push long-term interest rates higher. Setting policy correctly to reach 2% inflation is how the bank can help steady the government bond market.

Ueda made the point about long-term rates while Japanese government bond yields have been rising on expectations of more hikes and on worries about Prime Minister Sanae Takaichi's spending plans. His argument is that raising rates on time would calm long-term yields, because markets would have less reason to fear that inflation runs away.

Will the BOJ raise rates on October 30?

Ueda did not say. Policymakers will discuss at the October meeting whether to upgrade their view of underlying inflation, Reuters reported, citing sources. Many in the bank are wary of raising rates again so soon after September and want more data on how earlier increases have affected financial conditions, the same report said.

The yen's flat response

The reaction table on this page uses a ten-minute window, and on that measure the dollar was 0.005% lower at 157.779 yen. In our data the dollar touched its low for the day, 157.693 yen, at 00:15 UTC, a few minutes after Ueda spoke. It then drifted higher and was at 158.209 yen by 10:23 UTC, so the yen ended the European morning weaker than before the remarks. investingLive described the yen's gain right after Ueda spoke as modest.