Kazuo Ueda: Economic activity and prices, and monetary policy in Japan
Speech by Mr Kazuo Ueda, Governor of the Bank of Japan, at the Kisaragi-kai meeting, Tokyo, 3 June 2026.
Introduction
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 talk about the Bank's thinking on the future conduct of monetary policy, including the policy response to supply shocks like the ones that have emerged recently.
I. Impact of the Situation in the Middle East, and Economic Activity and Prices
Impact of the Situation in the Middle East on Economic Activity and Prices in Japan
I would like to begin by discussing the impact of the situation in the Middle East on economic activity and prices in Japan. Since the end of February this year, the price of crude oil, particularly Dubai crude, has risen substantially reflecting increased tension over the situation in the region. Please take a look at Chart 1. Japan's economy has faced several significant crude oil price hikes in the past. These include the two oil crises of the 1970s, and the surge in crude oil prices that occurred during the period of economic expansion in the mid-2000s. More recently, a surge in commodity prices was seen after Russia's invasion of Ukraine in 2022. Looking at the rate of price increases in the immediate aftermath of these shocks, this year's increase is not as large as in the first oil crisis, but it is comparable in magnitude to the other shocks.