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Japan's Bank of Japan (BOJ) Governor Kazuo Ueda emphasized the need to consider the country's persistently low real interest rates when formulating monetary policy. In a recent statement, Ueda highlighted that Japan's real rates remain below historical averages, complicating efforts to stimulate economic growth without triggering excessive inflation. The BOJ has maintained ultra-loose monetary conditions for years, but recent data shows limited progress in achieving its 2% inflation target. Ueda's remarks suggest the central bank may delay tightening until real rates stabilize, which could keep the yen under pressure against the US dollar and other majors. For markets, this signals prolonged accommodative policy from the BOJ, affecting global liquidity and currency valuations. Traders should monitor upcoming BOJ policy meetings and inflation data for clues on potential rate adjustments. The prolonged low-rate environment may also influence cross-border capital flows and investor sentiment toward Japanese assets.
