Former Bank of Japan official: The Bank of Japan may underestimate the actual risks posed by a war with Iran.

Former Bank of Japan official Ataka Nobuyasu said on Thursday that the Japanese economy may face supply shocks and demand contraction due to the war in Iran, and the central bank may have overlooked this risk as it focuses on inflation pressure. The Bank of Japan has recently sent a series of hawkish signals, leading the market to estimate a 70% probability of a rate hike in April. The surge in oil prices caused by the Middle East conflict, as well as the rising import costs due to the weakening yen, are exacerbating price pressures. Although the Bank of Japan kept interest rates unchanged in March, policymakers have already begun discussions on further rate hikes, and some are concerned that the central bank may be falling behind the situation in dealing with inflation risks. Ataka Nobuyasu warned that shortages of naphtha and other chemical products are expected, which could pose even greater risks and harm the economy. "Just like a natural disaster, in the face of this crisis, what people need to consider is the possibility of a massive interruption in the flow of goods, rather than worrying about how high prices will rise," said Ataka Nobuyasu, who currently serves as the chief economist at Rakuten Securities Economic Research Institute. "The Bank of Japan should not be concerned about whether to raise rates in April, but rather how to inject liquidity into the market to prevent economic collapse and the potential bankruptcy of some companies."