TOKYO - Bank of Japan chief Kazuo Ueda said Thursday that the rise in oil prices stemming from the Iran war could dampen the Japanese economy.
At a news conference following the BOJ's two-day policy meeting, Ueda said oil prices could also boost inflation by driving up energy prices, stressing that developments in the Middle East conflict will be an "important point" in deciding the timing of future rate hikes.
The central bank on Thursday left its policy interest rate unchanged at around 0.75 percent, noting that the Middle East situation and crude oil prices have emerged as fresh risks to the economic and price outlooks.
As the oil price surge has sent the U.S. dollar higher against the yen, the bank will closely monitor the impact on inflation as the weakening yen could raise import costs substantially, Ueda said.
"We need to be mindful that currency fluctuations could have a stronger impact on underlying inflation than in the past," he said.
