Japan may face stagflation risks from the Iran war that would be challenging to deal with using monetary policy, new Bank of Japan (BOJ) board member Toichiro Asada said, according to Reuters.
With Japan having emerged from deflation and now facing inflation, the BOJ can no longer focus solely on keeping monetary policy loose, said Asada, who is viewed as an advocate of expansionary monetary and fiscal policy.
Surging crude oil prices due to the Middle East conflict are increasing inflationary pressures, though raising interest rates to deal with the problem could hurt factory output and jobs, he said.
