MNI BRIEF: BOJ's Ueda Outlines Three Key Economic Factors

Bank of Japan Governor Kazuo Ueda on Friday highlighted three areas the central bank is closely monitoring when assessing Japan’s economic activity and price trends, underscoring both upside and downside risks.

“The first point concerns developments in overseas economies,” Ueda told business leaders in Osaka. He noted that while global growth is expected to return to a moderate pace, the outlook could shift significantly depending on economic and policy developments in major economies, particularly the U.S.

The second factor is how U.S. trade policies will affect Japanese firms’ profits as well as their wage- and price-setting behaviour, Ueda said.

“Depending on firms’ wage- and price-setting behavior, it is possible that price rises will persist for longer than expected,” Ueda warned. “Conversely, attention is warranted on the fact that, if prolonged food price increases lead to a deterioration in household sentiment, this could dampen private consumption and act to push down inflation,” he said.

Ueda’s comments suggest the BOJ remains cautious as it weighs the balance between cost pressures and potential drags on consumption.