In comments made to the parliament today, BoJ Governor Kazuo Ueda underlined growing focus on the effects of currency movements rather than solely on wages, signaling a broadening perspective on economic influences.
Ueda pointed out that as recent behavior in wage- and price-setting has become “somewhat more active,” BoJ has to be “mindful of the risk that the impact of currency volatility on inflation is becoming bigger than in the past.”.
“Foreign exchange rates make a significant impact on the economy and inflation. Depending on those moves, a monetary policy response might be needed,” Ueda said.
Similarly, Finance Minister Suzuki expressed significant concern about the negative aspects of a weaker yen, particularly the pressure it places on import prices.
“Since Japan relies on overseas markets for food and energy, and a large portion of its transactions are denominated in dollars, a weaker yen could raise prices of imported goods,” Suzuki said.
