BOJ Chief Emphasizes Resilience Amid Climate-Induced Inflationary Threats

The Bank of Japan aims to maintain its 2% inflation target despite potential climate change impacts on prices. Governor Kazuo Ueda highlights monitoring economic impacts and upcoming measures like carbon taxes. The Japanese government's green transition plan includes fiscal support for eco-friendly tech and future emissions trading.

The Bank of Japan (BOJ) aims to uphold its 2% inflation target even as climate change poses long-term economic threats. Governor Kazuo Ueda emphasized the need to closely observe the economic repercussions of climate change and government initiatives for a green transition on inflation expectations.

Ueda acknowledged that forthcoming carbon taxes and government subsidies could impact inflation expectations and generate short-term inflationary pressure. Yet, he believes Japan can accommodate these changes, given the nation's current underlying inflation remains below 2%.

Japan's green transition plan includes substantial fiscal support of 20 trillion yen over the next decade for eco-friendly technology. The strategy also outlines carbon pricing and emissions trading by 2026, followed by a fossil fuels surcharge in 2028, aiming to reshape the economy sustainably.

(With inputs from agencies.)