The Bank of Japan has left its policy interest rate unchanged, stating that inflation is moving toward a stable 2% growth. The central bank also highlighted the influence of global economic factors on Japan's outlook.
Interest Rate and Inflation
The Bank of Japan noted a recent spike in rice prices, which is expected to contribute to rising consumer costs. While the central bank did not indicate an immediate acceleration in its tightening pace, it reiterates that further rate increases remain on the table.
Impact of International Trade
Economists warn that possible U.S. tariffs, particularly on autos, could undermine Japan’s export-driven recovery by reducing demand and discouraging investment. Mizuho Research & Technologies estimates that a 40% drop in Japanese car shipments to the U.S. under a 25% tariff would cut exports and production by 1.8 trillion yen per year.
Japan's Economic Outlook
Despite external risks, the BOJ maintains that the country's economy has recovered moderately. A further sign of improvement came from Japan’s largest labor union group, which reported average wage increases of 5.46% this year, the highest in 34 years. Economists predict another rate hike could come as early as May 1 if conditions develop as expected.
The Bank of Japan remains confident in moderate economic recovery despite external challenges. Potential U.S. tariffs remain an uncertainty factor that may influence the central bank's future actions.
