Bank of Japan Gov. Kazuo Ueda indicated the need for vigilance over the impact of oil price spikes on the underlying inflation trend without dropping a clear hint on how that dynamic might influence the outcome at next month¡¯s policy meeting.
¡°Japan¡¯s experience shows that oil price shocks are never just oil price shocks. They are tests of the entire inflation regime,¡± Ueda said Wednesday in a speech to open a two-day international banking conference in Tokyo. The governor traced the impact of oil shocks dating back to the 1970s and noted, ¡°we are actually facing a fifth oil price shock.¡±
In keeping with standard protocol for remarks at this annual conference, the governor refrained from sending any overt signals about the policy path. Still, as a reflection of concerns about the effects of high oil prices, Ueda¡¯s remarks will likely support broad speculation in the market over the prospects for an interest rate increase when authorities next set policy on June 16.
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