BOJ official says rate hike in 'pause mode' due to U.S. tariffs
TSU--For the time being, the Bank of Japan will hold off on interest rate hikes while it closely monitors developments in the United States, a BOJ Policy Board member said on July 3.
In a speech in Tsu, Mie Prefecture, Hajime Takata said that the BOJ is 'in a state of pause' in raising interest rates due to the need to assess the impact of the U.S. tariff policy.
However, since it is difficult to envision a serious recession occurring in the United States, Takata indicated that the BOJ would proceed with interest rate hikes, saying that the BOJ 'will continue to shift gears again after a certain wait-and-see period.'
Takata, an economist by training, is considered a 'hawk' who is open to raising interest rates.
In the speech, he expressed his belief that the BOJ's 2-percent inflation rate target is 'close to being realized.'
Takata then emphasized that the BOJ 'will carefully assess the trend of the U.S. tariff policy and its impact on the Japanese economy.'
In particular, he said, the BOJ will confirm the sustainability of 'positive corporate actions,' such as firm capital investments, wage increases and shifting cost increases to prices.
Takata also described Japan as an 'advanced country in dealing with trade friction,' having experienced trade rows with the United States in the past.
He noted that the financial conditions of Japanese companies have improved in the 30 years since the bursting of the bubble economy, saying, 'I believe that excessive pessimism is also a major risk.'
When asked at a news conference following his speech how long the BOJ would 'pause' interest rate hikes, Takata replied, 'I would like to see the situation well into the summer. I am not in a position to say how long it will be.'
Regarding the quarterly tankan survey for June, which showed that business confidence among large corporations and manufacturers improved for the first time in two quarters, Takata said, 'Overall, business confidence remained at a favorable level. The outlook is not under any significant downward pressure.'
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Japan Today
22 minutes ago
- Japan Today
Ishiba vows 'steady' implementation of U.S. tariff deal
Shigeru Ishiba, Japanese prime minister and head of the Liberal Democratic Party, speaks during a media interview at the party's headquarters in Tokyo on July 20, 2025, as the results of the House of Councillors election come in. (Kyodo) ==Kyodo Prime Minister Shigeru Ishiba said on Friday that he wants to oversee the "steady" implementation of a recently clinched trade deal with the United States, as the embattled leader met with opposition leaders amid pressure from within his own party to resign. Yuichiro Tamaki, head of the Democratic Party for the People, told reporters after the meeting that Ishiba seemed to show a "strong desire" to stay on as premier to see the agreement take effect, despite the dismal outcome for the prime minister's ruling coalition in Sunday's upper house election. Some opposition party leaders, meanwhile, said Ishiba failed to allay their concerns about the agreement and the fact that it has not yet been put into writing. The leaders' talks, which lasted more than an hour at the Diet, were the first since Japan and the United States clinched the trade agreement in Washington on Tuesday, days after the House of Councillors election. "My worries instead deepened," Tamaki said after the meeting. "We don't know whether the negative impact on the economy and companies can be minimized with the deal." The trade deal is expected to be deliberated at a parliamentary committee during an extraordinary session on Aug. 4, lawmakers said. The trade agreement sets 15 percent auto and "reciprocal" tariffs on Japan, lower than U.S. President Donald Trump had envisioned. It also includes a scheme for $550 billion worth of Japanese investment in the United States. "We have come to an agreement with the United States that protects the national interests of both nations," Ishiba told his fellow party leaders at the Diet. The tariff deal, following rounds of talks at the ministerial and summit levels, came at a sensitive time for Ishiba, with his LDP suffering its worst election performance in years, and the ruling camp, including its junior coalition partner, Komeito, now left without a majority in both houses of parliament. He has so far sought to brush aside calls from some LDP members to step down, saying that he should tackle the challenges facing the country. The lowering of the auto and reciprocal tariffs to 15 percent from a combined 27.5 percent, and a proposed country-specific 25 percent, respectively, gave some relief to Japanese automakers and other exporters, lifting Japanese share prices. Japanese products already taxed at 15 percent or higher will not be subject to additional duties, while taxes on those with lower rates will face a uniform 15 percent levy, according to the government. Among agricultural products, the tax rates on beef and green tea are currently 36.4 percent and 10 percent, respectively, reflecting the baseline tariff of 10 percent. Under the reciprocal tariffs, beef will be taxed at 26.4 percent as it was before the baseline tax was introduced, and the rate on green tea will be 15 percent. A day after the deal was announced, however, the United States said Japan will buy $8 billion in U.S. farm and food goods, such as corn, soybeans, fertilizer and bioethanol. It also said the Asian ally will increase purchases of U.S.-made commercial aircraft, including 100 Boeing planes, and defense equipment worth "additional billions of dollars annually." Japanese government officials have said there is no discrepancy between the two nations regarding the agreement. At a government task force meeting earlier in the day, Ishiba instructed officials to take all possible steps to cope with the impact of the U.S. tariffs, which economists expect will still slow the export-driven economy. Yoshihiko Noda, head of the Constitutional Democratic Party of Japan, said the tariff agreement should be formalized in writing at a bilateral summit. Speaking to reporters, Noda, who served as prime minister for around one year through late 2012, also revealed that he stressed the need for the government to draw up an economic package to address the tariff fallout. Ishiba did not make any mention of compiling a supplementary budget for the current fiscal year through next March or whether he will step down or not, according to Noda. © KYODO
Nikkei Asia
22 minutes ago
- Nikkei Asia
Japan firms may rethink US study abroad over Trump policy: survey
The Trump administration's policies are putting pressure on Harvard and other top U.S. universities. © Reuters YOHEI KAWAI TOKYO -- Nearly a third of major Japanese companies say they may consider changes to policies for sending employees to study in the U.S., a Nikkei survey shows, as universities come under fire from Washington. Top U.S. universities face growing pressure from the Trump administration, which has tried to stop Harvard University from accepting international students, leaving Japanese companies looking for alternatives.
Nikkei Asia
2 hours ago
- Nikkei Asia
Asia needs to open up -- there's no going back to before Trump: ADB chief
Former Japanese currency czar Masato Kanda became head of the Asian Development Bank in February. (Photo by Suzu Takahashi) YUKI FUJITA MANILA -- In an age of growing uncertainty, Asian countries need to open their economies like never before, says Masato Kanda, president of the Asian Development Bank and Japan's former currency czar. Kanda took charge of the ADB, a multilateral financial institution that works to support infrastructure, combat global warming and reduce poverty in the Asia-Pacific region, just after U.S. President Donald Trump returned to the White House and "completely changed the world."
