BOJ’s Ueda warns of oil shock’s impact on entire inflation regime

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.”