In an address to parliament today, BoJ Governor Kazuo Ueda highlighted the difficulties central banks face when dealing with cost-push inflation.
Ueda explained, “In general, dealing with cost-push inflation is very difficult for central banks. On the one hand, you’d like to curb inflation. On the other hand, you don’t want to tighten monetary policy knowing that cost-push inflation will cool the economy.”
The governor emphasized the importance of striking the right balance, which he said, “depends on economic developments at the time, including where inflation stood at the outset.”
Ueda also noted that cost-push inflation in Japan is likely to ease as prices of imported raw materials have probably peaked.
These comments come ahead of BoJ’s two-day policy meeting starting on Thursday, during which the central bank is widely anticipated to maintain its ultra-loose monetary policy.
