The Bank of Japan held its policy rate at 0.5% Thursday and the Bank of England's MPC briefing this week kept the 4.5% Bank Rate untouched, with both central banks describing the war-driven energy shock as "temporary" — the same vocabulary that broke central-bank credibility in 2021. Governor Ueda's press conference cited "uncertainty" eight times and pushed any hike out of the spring window; Governor Bailey's MPC remarks treated Brent's run to $126 as a supply-side import that monetary policy should look through rather than answer. [1][2]

The eurozone, which the paper covered Thursday when the Q1 print landed at 3.0% with energy up 10.9% year on year, has already produced the empirical answer the BoJ and BoE are still calling premature. Energy at +10.9% is not a one-month pulse; it is the steady-state war premium translated into wholesale gas, refined-product margins, and electricity contracts. Calling that temporary requires a forecast that Hormuz reopens within the policy lag — roughly two quarters. Neither central bank made that forecast on the record. [3]

The political read is cleaner. Holding rates while a fiscal authority absorbs the cost-of-living shock through subsidies and price caps lets the central bank avoid the unpopular hike and lets the fiscal side carry the bill. Japan's energy-subsidy program runs through autumn; the UK's Ofgem cap is the analogue. Both governments are spending what their central banks are choosing not to tighten. [4]

The next test is the May datapoints. UK CPI prints May 21; Japan's national CPI on May 23. If the eurozone trajectory generalises, the "temporary" line gets harder to sustain by the next BoE meeting on June 19. Until then, two central banks have decided the war is somebody else's problem.

-- CHARLES ASHFORD, London