Boj warns the uncertainty of US tariffs can damage trust, economy
The Bank of Japan policy maker on Thursday warns the increase in uncertainty over the impact of US President Donald Trump, saying they can damage the household trust and injure the country’s fragile economy.
The statement came when Japan began a bilateral trade talks with the US in Washington, which according to Top Ryosei Akazawa’s negotiator did not belong to the topic of thorny exchange rates.
Speaking in parliament, Governor Boj Kazuo Ueda said Trump tariffs could affect Japan’s economy through various channels such as trade and financial market volatility activities.
When BOJ raised interest rates in January, the US economy was in good condition and the financial market was stable, Ueda said.
“Recently, uncertainty about US policy, especially that at tariffs, has increased sharply,” he told parliament.
“We will examine the development and impact on the Japanese economy without pre-concept at every policy meeting.”
With a very low real interest rate, BOJ will continue to raise interest rates if the economy and prices move according to the projection, said the Head of the Central Bank.
“But we must be aware of the facts of uncertainty about the trade policies of each country is getting higher.”
While the warning of the hit for growth of US tariffs, Ueda said that the stable increase in rice and other food prices could cause an increase in broad -based prices which could increase long -term inflation expectations.
In his speech delivered on Thursday, Boj Board member Junko Nakagawa said that uncertainty over US tariff policies could hurt the economy not only through export decline, but excessive market volatility.
Nakagawa also warned the risk of overshoot in domestic inflation, said that the company could increase prices and wages more than expected to continue the increase in costs including for labor.
On the other hand, increasing living costs and uncertainty over Trump tariffs can hurt sentiment and household consumption, he said.
The statement highlighted the challenges faced by Boj’s policy makers in preparing the estimated growth of fresh quarterly and inflation at their next meeting on April-1-1 May.
BOJ will cut the estimated economic growth at the policy meeting because Trump’s tariff increases the risk of fragile recovery and depends on exports, the source told Reuters.
The central bank came out of a massive stimulus program over a decade last year and raised interest rates to 0.5% in January with Japan’s view at the top to reach the 2% inflation target on a sustainable manner.
Source: Reuters
