Bank of Japan (BOJ) Governor Kazuo Ueda stated early Wednesday that the central bank may need to take policy measures if U.S. tariffs begin to negatively affect Japan’s economy. His comments, reported by Reuters, highlighted the BOJ’s ongoing vigilance regarding potential risks from global trade tensions.
Key Statements from Governor Ueda
Ueda emphasized that the BOJ is prepared to respond appropriately to developments related to U.S. tariff policies, which have already shown signs of impacting corporate and household confidence in Japan. He noted that since February, risks associated with U.S. tariffs have moved closer to a “bad” scenario that the BOJ had previously anticipated.
Despite these concerns, Ueda also expressed a cautiously optimistic outlook for Japan’s domestic economy, forecasting that food inflation will moderate and real wages are expected to stabilize in positive territory starting in the middle of the year. However, he acknowledged that both upside and downside risks to Japan’s price outlook remain.
Market Reaction
Following Ueda’s comments, the USD/JPY pair experienced a slight dip, trading 0.17% lower on the day at 143.00. Market participants will likely remain focused on any further developments regarding global trade tensions and their potential impact on Japan’s economic trajectory.
The BOJ’s cautious stance reflects its ongoing efforts to balance external risks with domestic economic conditions, and markets will be closely watching for any signs of additional policy adjustments in response to evolving trade dynamics.
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