Bank of Japan Deputy Governor Ryozo Himino said Japan is not currently facing stagflation, noting that inflation is moving around the 2% target while the economy continues to grow above potential. His remarks reinforce the view that underlying conditions remain broadly stable despite rising global uncertainties.
However, Himino warned that the outlook could shift if geopolitical tensions persist. He highlighted that a prolonged Middle East conflict could “push down growth while accelerating inflation”, creating a “dilemma and difficult problem for us”.
Looking ahead, Himino emphasized that policy decisions will remain flexible and data-dependent. The BoJ will act with “an eye on the scale and length of shock,” as well as prevailing economic conditions.
