By Megumi Fujikawa

TOKYO--Bank of Japan Gov. Kazuo Ueda said Wednesday that the central bank may consider monetary tightening if a surge in food prices leads to broader inflation.

"We may have to consider responding by raising interest rates if the rise in some food prices gradually spread to related prices such as processed food products and restaurants, which would make it easier to raise prices for other goods and services and lead to the possibility for more widespread inflation," Ueda told a parliamentary committee.

But if food inflation is only temporary, the central bank shouldn't respond with monetary policy, he added.

Consumer inflation has been running above the BOJ's target of 2% for almost three years. Recent price increases are led partly by higher food prices, including those for rice which have marked a record increase.

Despite inflationary pressure, the BOJ maintained its policy rate at 0.5% last week, as it examines the effect of the January hike. The BOJ governor has also become more cautious about uncertainties surrounding the economic outlook, including the impact of U.S. trade policy.

Write to Megumi Fujikawa at megumi.fujikawa@wsj.com

(END) Dow Jones Newswires

March 25, 2025 23:23 ET (03:23 GMT)

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