MNI BRIEF: BOJ's Ueda: High Crude Oil To Raise Underlying CPI

Bank of Japan Governor Kazuo Ueda on Wednesday warned that a sustained rise in crude oil prices could push up underlying inflation, which the Bank monitors closely as a key factor in guiding monetary policy.

Speaking to lawmakers, Ueda said the BOJ is carefully watching developments in the Middle East and their impact on the economy and financial markets. He noted that higher oil prices could worsen Japan’s terms of trade, weighing on the broader economy and potentially exerting downward pressure on consumer prices.

The governor reiterated the bank’s stance of gradually raising the policy rate if economic and price conditions evolve as expected. While he declined to comment directly on recent forex movements, Ueda said the BOJ is assessing their impact on prices and the inflation outlook in the context of achieving the 2% price target.

Ueda also emphasised that targeting real wages is difficult, though monetary policy can influence labour productivity.