Global Central Banks Convene in Tokyo to Strategise on Inflation and Growth Challenges

TOKYO: At a key global monetary policy conference in Tokyo, central bankers and economists from around the world are gathering to address rising inflation and slowing economic growth, two pressing concerns shaping the future of global economies. Hosted by the Bank of Japan (BOJ) and its affiliated think tank, the annual symposium—often likened to the U.S. Federal Reserve’s Jackson Hole gathering—brings together prominent officials from the Federal Reserve, European Central Bank, Bank of Canada, and Reserve Bank of Australia, among others.

This year's closed-door discussions are centred around the theme “New Challenges for Monetary Policy”, exploring how central banks can respond to sticky inflation, economic uncertainties, volatile markets, and global trade tensions, especially those stemming from U.S. tariffs under former President Donald Trump’s administration.

Although many global central banks are pausing or reversing interest rate hikes, the BOJ remains on a gradual path to raise rates and reduce bond purchases. However, recent global developments, including trade disputes, have cast doubt on how quickly Japan can proceed with its tightening policies.

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Former BOJ official Nobuyasu Atago noted that while the BOJ may need to pause rate hikes temporarily, clear communication can keep future hikes on the table. BOJ Governor Kazuo Ueda is expected to reaffirm this flexible stance during his keynote speech at the conference.

Sessions will include debates on reserve demand, quantitative tightening, and inflation risks, including a review of an IMF paper that warns against underestimating long-lasting inflation from supply shocks, like those experienced during the COVID-19 pandemic.

The Tokyo forum comes as inflationary pressures are beginning to reemerge in various economies. In the U.S., the Federal Reserve has held off on further cuts due to inflation risks tied to tariffs, while in Europe, the ECB faces growing calls to pause rate reductions as price stability becomes a renewed concern.

In Japan, core consumer inflation reached 3.5 per cent in April, led by rising food prices. Although this hints at progress toward the BOJ’s 2 per cent inflation target, it also reflects mounting pressure on household budgets.

As central banks navigate a complex economic landscape, the Tokyo conference serves as a critical moment for policymakers to share insights and chart paths forward that promote both stability and resilience in the face of global uncertainties.