Bank of Japan (BoJ) board member Junko Nagakawa indicated on Thursday that the central bank would persist with interest rate hikes if economic and price conditions evolve as expected. Nagakawa emphasized that the BoJ’s future monetary policy decisions would depend on developments in economic activity, inflation, and financial conditions.
She also highlighted several risks to Japan’s economic outlook, including the potential impact of U.S. tariff policies, overseas economic factors, and market volatility. Nagakawa warned that uncertainty surrounding U.S. trade policies could dampen sentiment among households and businesses, which would, in turn, affect Japan’s economy and price levels.
Additionally, she noted that excessive market volatility might exert downward pressure on the Japanese economy, and that companies were still in the process of passing on higher raw material costs to consumers. Nagakawa also raised concerns that growing wage pressure could lead to higher sales prices, which could disrupt the cycle of rising income and expenditure if consumer sentiment deteriorates further.
At the time of writing, the USD/JPY was trading 0.60% higher on the day at 142.75, pulling back from earlier highs.
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