Kiuchi Warns of Gradual CPI Rise as Middle East Costs Bite

Japan's economy is bracing for a potential rise in its consumer price index (CPI), according to Bank of Japan policy board member Kiuchi. He expects CPI to gradually increase due to ongoing conditions in the Middle East, which are driving up global energy prices.

The Middle East region is a major oil producer, and any conflict or instability can lead to higher oil prices. As a major importer of energy, Japan is particularly sensitive to these shifts, and any sustained increase in oil prices can feed into domestic inflation.

The Bank of Japan has maintained an ultra-loose monetary policy, including negative interest rates and yield curve control, to stimulate inflation and economic growth. However, rising CPI may prompt a reassessment of these measures, with some analysts speculating that the central bank may adjust its yield curve control or even consider rate normalization.