JN BOJ Gov Ueda Speaks

BOJ GOV UEDA: HARD TO PINPOINT EXACT LEVEL OF NEUTRAL RATE, WE WILL SCRUTINISE HOW JAPAN'S ECONOMY REACTS TO CHANGES TO SHORT-TERM INTEREST RATES

It is my great pleasure to have the opportunity to speak today at the Kisaragi-kai meeting. Since early spring this year, the environment surrounding economic activity and prices both in Japan and abroad has been significantly affected by increased tension over the situation in the Middle East. As the surge in crude oil prices draws global attention to heightened inflationary pressure, central banks around the world face challenges in navigating their particular context for economic activity and prices. The Bank of Japan is no exception. In conducting monetary policy appropriately, it has become more important to accurately gauge the current situation of economic activity and prices and envision future developments. Today, after discussing its view on economic activity and prices, I would like to t BoJ's Governor Ueda: Our basic stance is to continue raising policy rate in accordance with economic, price, financial developments. BOJ GOV UEDA: EVEN IF SITUATION REGARDING MIDDLE EAST REMAINS UNCLEAR, SHOULD IT BE JUDGED THAT UPSIDE RISKS TO PRICES OUTWEIGH DOWNSIDE RISKS TO ECONOMIC ACTIVITY, IT WILL BE NECESSARY TO THOROUGHLY DISCUSS PROS AND CONS OF RAISING POLICY RATE BoJ's Governor Ueda: Likely that a rise in crude oil prices will push up the prices not only of energy, but also prices in general, particularly of a wide range of goods. BOJ GOV UEDA: THE ENVIRONMENT IN JAPAN TODAY HAS CHANGED SIGNIFICANTLY, COMPARED TO 4 YEARS AGO, AS THE COUNTRY'S DEFLATIONARY MINDSET HAS BEEN DISPELLED AND THE WAGE- AND PRICE-SETTING BEHAVIOUR OF FIRMS HAS BECOME MORE ACTIVE

We are pleased to welcome all of you, distinguished speakers and guests, to the 2026 BOJIMES Conference. Thank you very much for your participation. The theme of this year’s conference is "Monetary Policy from New Perspectives." I am sure that supply shocks loom large in everyone’s mind. They are not a new phenomenon but at least have become more frequent. Whether a new perspective is truly needed, I leave it for debate — but revisiting past experience is, I think, an indispensable starting point. I do not have a new perspective to offer at this point. Instead, let me go through Japan’s experience with major energy shocks during the last five decades and offer some food for discussion. Since the 1970s, the global economy has been hit by significant spikes in energy prices, especially oil prices, as shown in Chart 1. There are five notable incidents: the first oil shock of 1973, the second oil shock of 1979, the oil price surge of the mid-2000s leading to the 2008 Great Financial Crisis, Russia's invasion of Ukraine in 2022, and the recent conflict in the Middle East. However, the response of Japan’s consumer price index (CPI) to oil price Just in | BoJ Governor Ueda warns that elevated inflation expectations and increasing wages heighten the risk of second-round effects on the economy. Just in | BoJ Governor Ueda: A significant shock may remain temporary if transmission channels remain inactive. Just in | BoJ Governor Ueda: Japan's oil shocks highlight challenges to the broader inflation framework, beyond just oil prices.

I am delighted to be given this opportunity to speak to you at the FIN/SUM 2026. The year 2016, when the first FIN/SUM was held, marked a milestone for the Bank of Japan as well: we established the FinTech Center that very year, taking into account the growing momentum in fintech efforts and our support for these developments as the central bank such that they would contribute to enhancing financial services and ultimately achieving sustainable growth in Japan's economy. The theme of this year's FIN/SUM is "The New Financial Ecosystem Shaped by AI and Blockchain." AI and blockchain have been significant topics of interest at the Bank since its founding of the FinTech Center. Assuming application of these technologies in the areas of finance and payments, the FinTech Center conducted joint research with the European Central Bank (ECB), identifying opportunities and possible challenges that blockchain could bring to financial market infrastructures. The Bank's Institute for Monetary and Economic Studies (IMES) also held workshops to explore legal considerations surrounding issues such as the use of distributed ledger technology (DLT) in securities settlements and the use of algorithms and AI. Fast forward 10 years, blockchain technology has entered the implementation phase in a wide range of financial services. Coupled with the rapid adva Just in | Bank of Japan Governor Ueda announces plans for technical experiments on blockchain-based settlement using central bank money in current account deposits.

It is a great honor to have this opportunity to address such a distinguished gathering of business leaders in Japan today. 2026 is now just a week away. Looking back over the past twelve months, Japan's economy has shown resilience, having continued to recover moderately despite downward pressure on corporate profits stemming from the impact of U.S. tariff policies. Against this backdrop, at the Monetary Policy Meeting (MPM) held last week, the Bank of Japan decided to raise the policy interest rate for the first time since January ...