Tokyo, April 10 - Bank of Japan Deputy Governor Ryozo Himino said in a parliamentary appearance that the central bank will shape its monetary policy with attention to both how large and how prolonged the economic shock from the Middle East war turns out to be.
Addressing lawmakers, Himino said he did not consider Japan to be in a state of stagflation, observing that inflation has been moving around the BOJ's 2% target and that the economy is growing above its potential.
"But if the Middle East conflict persists and works to push down growth while accelerating inflation, it would pose a dilemma and difficult problem for us," Himino said.
Himino highlighted the conditional nature of policy choices amid evolving external pressures. He said the central bank would make the most fitting monetary policy decision from the perspective of stably reaching the 2% inflation goal, taking into account the scale and length of any shock and the economic environment at the time.
"We will take the most appropriate monetary policy decision from the standpoint of stably achieving our 2% inflation target with an eye on the scale and length of shock, as well as economic environment at the time," he said.
The comments frame the BOJ's approach as reactive to the trajectory of external developments rather than pre-committing to a fixed course. Himino's remarks underline the bank's focus on balancing its inflation objective against changes in growth momentum that might be driven by geopolitical events.
By stressing both the magnitude and the duration of the shock, the deputy governor pointed to two dimensions the BOJ will monitor closely as it evaluates policy options. He emphasised the central bank's intent to weigh incoming economic information in context when deciding how to act to maintain price stability.
The exchange in parliament reiterated the BOJ's stated inflation target and the institution's willingness to adjust policy in response to shifts in the economic environment, should the external shock evolve in a way that complicates the trade-off between growth and inflation.
Context and next steps
Himino's testimony signals that the BOJ will continue to assess developments in both price trends and growth, with policy calibrated to observed shocks from abroad. The bank's decisions will be framed by its commitment to the 2% inflation target and the need to respond appropriately to changes in the economic setting.