BOJ Governor Ueda Warns Japan Facing Oil Price Shock

May 28, 2026 | News On Japan

TOKYO - Bank of Japan Governor Kazuo Ueda said on May 27th that Japan's economy is facing an "oil price shock" as tensions in the Middle East drive up crude oil prices, speaking at an international conference hosted by the central bank.

Reflecting on past oil crises in the 1970s, Ueda noted that the impact of higher crude oil prices on inflation differs depending on factors such as wages, inflation expectations, demand and exchange rates.

"Central banks should not view oil prices in isolation," Ueda said. "Even with the same rise in crude oil prices, the effects can vary significantly depending on wages, expected inflation, demand and exchange rates."

He stressed the need for policymakers to assess the broader ripple effects on prices rather than focusing solely on the rise in energy costs.

Ueda also emphasized that the current situation differs from past oil crises, saying it is important to carefully determine the nature of the latest oil price shock.

Financial markets had been closely watching for any remarks that might hint at an early interest rate hike ahead of the Bank of Japan's monetary policy meeting scheduled for mid-next month, but Ueda made no reference to future rate policy during his speech.

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