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Oil price shocks, inflation, and monetary policy in Japan

· Kazuo Ueda, Governor of the Bank of Japan (Japan)

Summary written by Dark Majestic in its own words · topics: monetary policy and interest rates, inflation and price stability, growth, investment and productivity, labour markets and jobs

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· Kazuo Ueda Wiki · Bank of Japan WikiOil price shocks, inflation, and monetary policy in Japan

ContextOpening remarks by Kazuo Ueda, Governor of the Bank of Japan, at the 2026 Bank of Japan-Institute for Monetary and Economic Studies Conference "Monetary policy from new perspectives", hosted by IMES, Tokyo, 27 May 2026.

Why it mattersThe Bank of Japan Governor draws on Japan's history of oil shocks to explain how policy should respond to today's energy prices.

Problems raised
  1. Oil shocks have repeatedly hit Japan's economy.
  2. Supply shocks slow growth while raising prices.
  3. Where expectations are already high, shocks can spark wage-price spirals.
Solutions proposed
  1. Study past oil shocks to guide today's policy.
  2. Watch inflation expectations and wages closely.
  3. Adapt policy to the inflation regime in place when shocks hit.
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