Bank of Japan Governor Kazuo Ueda told parliament Monday that underlying inflation is “quite close” to the 2% target, with strong global AI demand adding to price pressures from a tight labor market. Ueda noted it was increasingly important to anchor inflation around 2%. While rising raw material costs from the Middle East conflict were lifting prices, adding that demand-driven pressures from jobs and recovery were also at play. He further added that raising rates at an appropriate pace would help prevent spikes in bond yields, warning that failing to adjust policy could stoke concern over an inflation overshoot. Asked about fiscal spending, he replied that higher expenditure would spur wages and prices, though boosting supply capacity could moderate inflation longer term. The remarks came ahead of the central bank’s policy meeting later this month, where fresh growth and inflation forecasts will be closely watched for signals on rate-hike timing.