The Bank of Japan said surging oil costs and supply disruptions brought about by the Middle East conflict could hurt the economy, signalling caution over downside risks to growth that may prod it to tread cautiously in raising interest rates. The assessment, made in a report based on findings from the bank's regional branches, contrasted with the board's hawkish debate focusing on inflationary risks from the war, highlighting uncertainty on whether the BOJ could raise rates this month. In the quarterly report, the BOJ said several regions saw firms already feeling the strain from rising input costs and disruptions in raw material supplies caused by the Iran war.