Bank of Japan Governor Signals Continued Rate Hikes Amid Middle East Tensions

Bank of Japan Governor Kazuo Ueda stated on Wednesday that the central bank will continue to raise interest rates if the economic and price outlook aligns with its expectations. According to Jin10, Ueda emphasized the importance of monitoring the impact of Middle East conflicts on global and Japanese economies, particularly through rising energy costs and financial market volatility. Ueda noted that an increase in crude oil prices could worsen Japan's trade conditions and hinder economic growth, potentially exerting downward pressure on core inflation. However, he added that sustained oil price hikes might elevate long-term inflation expectations among households and businesses, thereby increasing core inflation. Addressing recent yen depreciation, Ueda mentioned that the Bank of Japan is "very cautiously" analyzing how exchange rate fluctuations could affect current and future price trends.