Bank of Japan (BoJ) Governor Kazuo Ueda has emphasized the need for vigilance in response to rising crude oil prices and global financial instability, which are being driven by the escalating conflict in the Middle East [1]. Ueda warned that a prolonged war could disrupt supply chains and factory output, potentially impacting Japan's economy [1]. While Japan’s economic and inflation trends remain broadly on track, Ueda noted that higher oil costs may have mixed effects on underlying inflation, depending on output gaps and inflation expectations [1].
Ueda stated that the BoJ will closely monitor the situation’s impact on the economy, prices, and financial conditions ahead of its upcoming policy meeting scheduled for April 27-28 [1]. Additionally, Japan’s preliminary moneystock data for March 2026 show M2 and M3 increasing by 2.0% year-on-year and 3.7% year-on-year, respectively, which is an uptick from 1.7% and 2.0% in February [1].
BNY's Head of Markets Macro Strategy Bob Savage highlighted Ueda's comments, underscoring the risks posed by oil shocks and global financial instability to Japan's economic outlook [1]. No specific market reactions or analyst forecasts regarding USD/JPY or other financial instruments were mentioned in the article [1].
CONCLUSION
BoJ Governor Ueda’s caution regarding oil price risks and global instability signals heightened vigilance ahead of the late-April policy meeting. The increase in Japan’s moneystock data suggests ongoing monetary expansion, but the potential for supply chain disruptions and inflation volatility remains a concern. Market participants are likely to closely watch the BoJ’s next steps as geopolitical risks persist.