(Bloomberg) -- Governor Kazuo Ueda said the Bank of Japan won’t change policy in direct response to currency moves, a comment that comes as market players await US inflation data that may tip the yen past a threshold risking currency intervention by Japan’s government.

“We won’t consider changing monetary policy at all to directly respond to moves in foreign exchange,” Ueda said in response to questions in parliament Wednesday. Still, the central bank will keep an eye on the impact of the weak yen on the economy and inflation dynamics, he added.

Ueda stuck with the BOJ’s standard remarks on currencies with the yen near a 34-year low versus the dollar. While currency interventions are decided by the Ministry of Finance, many BOJ watchers have flagged the risk the central bank might consider an early rate hike if the yen slumped further and the ministry intervened but failed to shift the market tide.

Japan’s currency authorities have ramped up warnings against speculative trading after the yen unexpectedly weakened even after the BOJ last month raised rates for the first time since 2007. US-Japan interest rate differentials remain wide, as the BOJ has set its benchmark rate at 0 to 0.1%.

While delivering a semi-annual report to a parliament, Ueda also said the bank would consider a policy shift if the weak yen wound up indirectly thwarting a virtuous cycle of wages and inflation by spurring cost-push inflation.

“Uncertainties surrounding our economy are extremely high,” Ueda said. “We need to closely watch financial and currency markets and their impacts on the economy and inflation.”

©2024 Bloomberg L.P.