Attention on Inflation Risk Needed More Than Ever: BOJ Ueda

Tokyo, July 31 (Jiji Press)–Bank of Japan Governor Kazuo Ueda said Friday that it is more necessary than ever to pay attention to the risk of higher inflation. Underlying inflation is expected to remain consistent with the bank’s 2 pct price stability target from the second half of fiscal 2026 through the next fiscal year, he said at a press conference after the central bank decided to keep its monetary policy unchanged. But the top Japanese central banker added that there is a risk of inflation rising above the target, stressing that the BOJ will thoroughly discuss such risks at its next and later policy-setting meetings. If the central bank fails to stabilize prices and is forced to raise the policy rate sharply as a result, that would negatively impact the promotion of healthy growth investment, Ueda also said. Meanwhile, the BOJ chief said that the risk of Japan returning to deflation is not zero. At its two-day meeting through Friday, the BOJ’s Policy Board decided by a vote of eight to one to maintain the policy of guiding the unsecured overnight call rate, Japan’s benchmark short-term interbank rate, to around 1 pct. Also, the bank raised its outlook for Japan’s real gross domestic product growth for fiscal 2026 to 0.6 pct from 0.5 pct. END [Copyright The Jiji Press, Ltd.]