Bank of Japan chief stresses need to hit 2% inflation backed by wage gains

Bank of Japan Governor Kazuo Ueda said underlying inflation is accelerating toward the bank’s 2 percent target, stressing that price rises must be matched by solid wage gains.

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The remarks came ahead of the central bank’s two-day policy meeting ending on Thursday, where the board is widely expected to keep interest rates steady at 0.75 percent.

Surging oil prices from the Middle East conflict add to already mounting inflationary pressure, complicating the BOY’s decision on how soon to raise rates as Japan is reliant on energy imports to power its economy.

Ueda told parliament that wages and prices are rising moderately in tandem as firms grow bolder in passing on higher raw material and labour costs.

“Underlying inflation is gradually accelerating towards our 2 percent target,” and is seen converging around 2 percent sometime from the latter half of fiscal 2026 through 2027, Ueda said on Tuesday.