The Bank of Japan continues to pursue a policy of raising interest rates despite uncertainties surrounding US trade tariffs. Salary and price increases are anticipated.
Expectations for Salary and Price Increases
Deputy Governor Shinichi Uchida stated that even if inflation temporarily slows, the labor market in Japan remains tight, leading to rising wages. He also noted that companies are likely to increase prices due to rising labor and shipping costs.
Views of BOJ Board Members on Rate Hikes
At its recent meeting, the Bank of Japan kept its key interest rate at 0.5%. Despite the pressures from US tariffs, board members remain committed to achieving a 2% inflation target. One board member remarked that "the BOJ may enter a temporary pause in rate hikes due to slowing US growth, but must maintain nimbleness in monetary policy."
Plans for G7 Meeting Regarding Currencies
Finance Minister Katsunobu Kato announced plans to meet with US Treasury Secretary Scott Bessent at the G7 summit in Canada. He clarified that currency issues would not be part of regular trade negotiations, as Japan and the US have agreed to keep those matters within the finance ministers' purview.
Thus, the Bank of Japan continues to focus on raising rates despite external economic risks. The approach to monetary policy remains flexible amid uncertainties in international trade.
