BOJ Governor Ueda says food inflation in Japan may not be temporary

TOKYO :Bank of Japan Governor Kazuo Ueda said on Wednesday the central bank will conduct monetary policy bearing in mind there are risks that food prices may continue to be high and affect people's inflation expectations.

"We're deeply aware that a rise of more than 2 per cent in prices of fresh foods and other commonly purchased products are negatively impacting people's lives," Ueda told parliament.

"Rises in the prices of food, including fresh food, won't necessarily be temporary and there's the chance that this will impact people's mindsets and price expectations," he said.

Ueda reiterated that the pace of the central bank's interest rate hikes will depend on economic, price and financial situations.

He also confirmed that the central bank will in June conduct a mid-term review of the its current plan to taper government bond purchases and come up with a new one for April 2026 onwards.

"We've formulated and are implementing our bond-taper plan based on the view that tapering should be done in a predictable manner with a certain degree of flexibility to ensure the stability of bond markets," Ueda told parliament.

Last July, the bank said it plans to halve its monthly Japanese government bond purchases to 3 trillion yen as of January-March 2026.

The central bank did away with its policy of massive monetary stimulus in March and raised short-term interest rates to 0.25 per cent in July, noting that it sees inflation as nearing the bank's target of being around 2 per cent sustainably.