At the House of Councillors Budget Committee, BOJ Governor Ueda said that underlying inflation had come quite close to 2%. He stressed that the focus of policy decisions would be stabilising prices at around the 2% level.
Kazuo Ueda (植田 和男), Governor of the Bank of Japan, said that underlying inflation has been gradually rising and is now quite close to 2%. He also said that the economy is at an important juncture where it is necessary to stabilise prices at around 2%.
He said that, in general terms, it is difficult to distinguish between cost-push inflation caused by higher import prices and demand-pull inflation originating in wage growth. While higher energy and raw-material prices resulting from the situation in the Middle East have had broad effects, there were also indications that strong global AI demand is boosting domestic capital investment and exports, generating price increases.
The Governor summarised that wages continue to be passed through into selling prices for goods and services, and indicated that overseas media also view strong AI demand as spreading into the domestic economy. The BOJ has indicated that, as underlying inflation approaches its 2% target, how to secure stability will be the focus of policy decisions.
The future course of monetary policy is expected to depend on whether the virtuous cycle between wages and prices continues.