BoJ Governor Ueda says G20 discussed impacts of Middle East on prices and on the global economy, adds many said the Middle East is an important factor and remains uncertain
Says:
- Supply shock-driven inflation is harder to tackle than demand-driven.
- Rising oil prices put upward pressure on underlying inflation, but worsen Japan's terms of trade and weigh on the economy.
- Monetary conditions remain highly accommodative and Japan's real interest rate is low.
- BoJ will decide policy based on likelihood of forecast materialising and risk at each meeting.
- Declines to comment on falling market expectations for an April rate hike.
Context
Governor Ueda's comments highlight the Bank of Japan's ongoing concerns about inflation, particularly in the face of rising oil prices driven by geopolitical tensions. The emphasis on supply shock-driven inflation suggests a cautious approach for monetary policy, indicating that any potential tightening could be contingent on evolving economic conditions and risks rather than a predetermined timeline.
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