---
title: "BOJ policymaker Koeda: Inflationary risk is already materialising"
type: "News"
locale: "en"
url: "https://longbridge.com/en/news/287164536.md"
description: "BOJ policymaker Koeda highlights that the risk of inflation overshooting is greater than that of recession, with a potential rate hike in June being considered. The evolving Middle East conflict and rising energy prices complicate the economic outlook, while wage pressures are increasing. The BOJ faces scrutiny as it navigates these challenges, balancing inflation control with the risk of worsening the economic situation in Japan."
datetime: "2026-05-21T06:00:00.000Z"
locales:
  - [zh-CN](https://longbridge.com/zh-CN/news/287164536.md)
  - [en](https://longbridge.com/en/news/287164536.md)
  - [zh-HK](https://longbridge.com/zh-HK/news/287164536.md)
generator: "portal-rs"
---

# BOJ policymaker Koeda: Inflationary risk is already materialising

-   Risk of inflation overshoot is bigger than risk of recession
-   For now, not expecting a sharp deterioration in the economy
-   But depending on Middle East conflict, our view on economic outlook could change
-   There is some time before June policy meeting
-   Will continue to look at any changes in the balance between prices and growth risks
-   Must guide policy to avoid being behind the curve on inflation
-   Compared with the past, there is a stronger role that the BOJ must play in using monetary policy to cope with inflation

There's certainly a slight hawkish leaning to her remarks. And that aligns with market expectations of leaning more towards a rate hike in June. As things stand, traders are pricing in ~76% odds of a 25 bps move by the BOJ next month.

However, their job is certainly made complicated by the evolving US-Iran conflict. Higher energy prices continue to put upwards pressure on the broader inflation outlook. However, that is largely due to cost-push factors and is something that the BOJ does not want to react towards.

That being said, wage pressures are also moving up and the central bank had been teeing up a rate move using that as a base platform. So, it's a tough one to suddenly need to find reasons to be more prudent instead.

At the same time though, they are under heavy scrutiny amid the Japanese economy taking a heavy hit from surging energy prices and also mounting fiscal worries. All of that of course ties to the Middle East conflict but the spillover impact has been rather profound in Japan.

As such, raising interest rates during this time is also a difficult choice as it risks worsening the fundamental outlook for the yen and the economy in general.

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---
> **Disclaimer: This article is for reference only and does not constitute any investment advice.**