BoJ Governor Ueda says the central bank communicates closely with the government

Says:

• Wages need to increase significantly for Japan to sustainably achieve BoJ’s price target.
• Mechanism in which wages and prices rise in tandem becoming embedded in Japan’s economy.
• Exchange rate fluctuations are now more likely to influence corporate behaviour.
• The impact of FX movements on prices is being closely watched.
• If economic activity and inflation align with forecasts, interest rate increases will continue.
• A rate hike would be appropriate if the economic outlook evolves as expected.
• General views on the economy were exchanged with Takaichi last month.
• The BoJ will carefully assess how Middle East developments affect domestic and global economic conditions.
• Persistently high oil prices could lift underlying inflation by pushing up medium- and long-term household and corporate inflation expectations.
• The BoJ will closely monitor the economic implications of the Middle East conflict.
• Developments in the Middle East could significantly affect both the global and Japanese economy through energy prices and market channels.
• Higher energy prices may also influence inflation expectations.
• Elevated oil prices worsen Japan’s terms of trade, weighing on the economy and underlying inflation dynamics.
• Oil prices have been rising sharply.