Bank of Japan deputy chief signals further rate hikes
TOKYO - One of the Bank of Japan's deputy chiefs on July 23 reiterated the bank's readiness to pursue a path toward monetary normalisation if the Japanese economy and inflation move in line with expectations, while noting uncertainties regarding US tariffs.
'Given that real interest rates are at significantly low levels...the bank, in accordance with improvement in economic activity and prices, will continue to raise the policy interest rate,' the bank's deputy governor Shinichi Uchida said in a speech in Kochi, western Japan.
Saying it is not yet clear how economic activity and prices at home and abroad will develop, Mr Uchida said he will pay close attention to the economic data 'as there are extremely high uncertainties and as domestic and overseas economies seem to be at a critical juncture.'
Mr Uchida's remarks came hours after US President Donald Trump said that he has struck a
'massive' trade deal with Japan , under which Tokyo has agreed to a 'reciprocal tariff' of 15 per cent, compared with the 25 per cent initially proposed.
Expressing concern about the potential downward pressure on prices in Japan from US trade policy, Mr Uchida also noted upward pressure from cost-push factors, particularly in food prices.
'My attention will therefore be on how such upward and downward pressure may affect the outlook for prices through, for example, firms' wage- and price-setting behavior.'
The bank has shifted from a decade of unorthodox easing, lifting its key rate three times since March last year.
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But the central bank kept its benchmark rate unchanged at 0.5 per cent at its June policy meeting, the third straight gathering without a policy adjustment, with Mr Trump's tariffs clouding the outlook for Japan's export-oriented economy. KYODO NEWS
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