BOJ/Ueda: If price risks increase, we will adjust monetary policy more strongly.

Kazuo Ueda, the Governor of the Bank of Japan (BOJ), stated that if the persistent rise in food costs leads to widespread inflation, the BOJ must raise interest rates. He signaled the bank's determination to continue withdrawing monetary support from the economy. Ueda emphasized that Japan's recent "very high" inflation is largely due to temporary factors like rising import costs and food prices, which are likely to dissipate, thus not warranting a tightening of monetary policy.

However, he highlighted the potential for continuous increases in food costs to drive up prices of other goods and services. Ueda remarked, "If such movements lead to widespread inflation across the economy, we must respond by raising interest rates." He also mentioned that the BOJ would take "stronger steps" to reduce monetary support if inflation exceeds forecasts, indicating the potential for earlier or more aggressive rate hikes.