Japan’s inflation response to import costs and currency shocks should influence monetary policy, Bank of Japan Executive Director Koji Nakamura said in conference notes released Monday. The BOJ raised its policy rate to a 31-year high of 1% in June and is set to hike again this week, Reuters sources said. Nakamura warned that frequent supply shocks should not automatically be treated as temporary because they can raise underlying inflation and inflation expectations. He also identified Japan’s shrinking labor pool, rising wages, weak yen and higher fuel costs linked to the Middle East conflict as persistent risks to inflation overshooting the BOJ’s 2% target. The comments underscore how central banks are reassessing policy as pandemic disruptions, Russia’s invasion of Ukraine, higher U.S. tariffs, geopolitical tensions and climate change complicate the traditional focus on demand-driven inflation.