Bank of Japan Governor Kazuo Ueda on Thursday suggested a possible need to raise interest rates again if the yen's depreciation continues and leads to notable price increases.
"If the scale of impact that cannot be ignored arises, there could be a change in monetary policy," Ueda told a press conference in Washington after a Group of 20 finance leaders meeting, noting that the weak yen could raise trend inflation through increases in prices of imported goods.
He said the Japanese central bank will show how the yen's decline against the U.S. dollar and other currencies since January has affected the economy in its quarterly growth and price projections due at its policy meeting next week.
Ueda's comments came as financial markets are looking for clues on the timing of the next rate hike by the BOJ. At its March policy meeting, the BOJ ended its negative rate policy and decided to guide short-term rates within a range of zero to 0.1 percent.
The gathering of finance leaders from the world's 20 major economies took place on the margins of the spring meetings of the International Monetary Fund and World Bank.
Brazil, which holds the G20 presidency this year, prioritized discussions on issues it hopes to highlight at a summit later this year, including financial means for developing countries to tackle climate change and multilateral development bank reforms.
They did not release a post-meeting joint statement. A senior Japanese official said that Brazil had planned from the beginning not to do so.
At a joint press conference with Ueda, Japanese Finance Minister Shunichi Suzuki said he began his remarks at the two-day meeting by "condemning Russia in the strongest terms" for continuing its war against Ukraine.
Suzuki said he made the case that the war is having a negative impact on the global economy and urged Russia to immediately end the conflict.
Russia is one of the members of the group, which also includes China, Germany, Indonesia, Saudi Arabia, South Korea and the United States, among others.
Asked whether he touched on recent foreign exchange rate developments during the meeting, given that the yen's sharp fall against the dollar has been a hot topic at home, Suzuki said that neither he nor his counterparts raised the issue because it was not on the agenda.
But Suzuki added that some finance leaders from emerging countries expressed concerns about the outflow of funds and the ballooning of dollar-denominated debts amid high U.S. interest rates.
On this issue, Brazilian central bank chief Roberto Campos Neto said at a press conference following the G20 meeting that the strengthening of the dollar is "always a problem."
Suzuki said he believes the yen's recent weakness is not just due to the interest rate gap between Japan and the United States.
He said exchange-rate levels are determined by "various factors" including economic conditions and the sentiments of market players.
