Bank of Japan Governor: Must simultaneously face rising energy prices and economic slowdown risks; current policy formulation is very difficult

Mars Finance reports that on April 17, Bank of Japan Governor Haruhiko Ueda attended the G20 Finance Ministers and Central Bank Governors Meeting on Thursday and, after the meeting, told reporters in Washington: “The current situation involves a major shock stemming from rising energy prices. This brings both risks of upward pressure on prices and risks of downside pressure on the economy.”

Haruhiko Ueda, Governor of the Bank of Japan, stressed the challenges faced by policymakers. They need to deal with both upside risks to prices driven by the Middle East conflict and downside risks to the economy at the same time. Before the release of this month’s policy decision, he did not send a clear signal regarding interest rates.

Haruhiko Ueda said: “That is why policy response is very difficult. It isn’t easy to give a broad answer.” This may be his final opportunity to signal to the market before the April 28 rate decision. In addition to deciding the benchmark interest rate, next week’s meeting will also publish the latest economic forecasts, which are expected to revise up the inflation outlook, while the growth forecasts may be downgraded.

“Overall, considering factors such as how long the shock may last and other economic conditions, we will ultimately choose the most appropriate measures to continue achieving the 2% inflation target,” Haruhiko Ueda told reporters. “However, if I may add, for Japan, even when looking at the medium-term period, real interest rates remain very low,” Haruhiko Ueda said. “In that sense, the financial environment is highly accommodative. With that in mind, we hope to continue making various decisions.”