As central bankers gather in Tokyo for a high-stakes annual meeting hosted by the Bank of Japan (BOJ), the global financial community is grappling with two looming threats—sluggish economic growth and stubborn inflation.
Dubbed Japan’s version of the U.S. Federal Reserve’s Jackson Hole symposium (minus the mountain hikes), this exclusive two-day conference will tackle the most pressing challenges facing modern monetary policy. The event, organized by the BOJ and its affiliated think tank, features top minds from the U.S. Federal Reserve, European Central Bank (ECB), Bank of Canada, Reserve Bank of Australia, and leading academic institutions.
The central theme this year: how to steer through the storm of inflation that just won’t ease, unpredictable market shifts, and economic risks triggered by U.S. tariffs—many of which stem from former President Donald Trump’s protectionist trade policies.
While most speeches are closed to the public, the topics are telling. One major discussion centers around a provocative IMF paper titled “Monetary Policy and Inflation Scares,” which warns of inflation caused by supply shocks like those seen during the COVID-19 pandemic. The paper cautions central banks against assuming such shocks will simply fade on their own.
This message strikes a nerve globally. The U.S. Federal Reserve has recently put the brakes on expected rate cuts due to persistent inflation. In Europe, the ECB is expected to ease rates in June but is already signaling caution going forward. ECB board member Isabel Schnabel recently warned that tariffs could drive inflation higher in the midterm, even if they seem disinflationary at first.
Japan’s central bank, meanwhile, is treading a delicate path. Although the BOJ had begun hiking interest rates and slowing its bond purchases, it was forced to revise its economic growth forecast downward earlier this month due to the impact of U.S. tariffs. With inflation in Japan climbing to 3.5%—its highest in over two years—consumers are feeling the pinch, especially with food prices jumping 7%.
Kazuo Ueda, Governor of the BOJ, is expected to address these issues in a keynote speech, followed by insights from Bank for International Settlements chief Agustin Carstens.
Experts believe the BOJ is behind the curve in managing price pressures. “The BOJ doesn’t need to abandon rate hikes completely—it just needs to wait for the right moment to resume,” said Nobuyasu Atago, former BOJ official and current chief economist at Rakuten Securities.
As global inflation remains sticky and trade wars reignite economic fears, policymakers face the delicate task of striking a balance—stimulating growth without letting inflation spiral out of control.
The Tokyo conference may not have sweeping public announcements, but behind closed doors, the world’s monetary leaders are likely planning their next moves—moves that could shape the future of the global economy.
