"Trump Next Administration Economic Policy Uncertainty Grows"
Yen-Dollar Exchange Rate Surpasses 156 Yen Amid Interest Rate Freeze
Kazuo Ueda, Governor of the Bank of Japan (BOJ), stated that the decision on interest rate hikes will be made after securing information on wage trends, including next spring's wage negotiations (Chuntu). He also mentioned that if the economic and inflation outlooks materialize as expected, the BOJ will adjust the benchmark interest rate.
According to the Nihon Keizai Shimbun (Nikkei) on the 19th, Governor Ueda made these remarks at a press conference following the Monetary Policy Meeting, where it was decided to maintain the short-term policy interest rate, the benchmark rate.
Governor Ueda said, "If the economy and inflation develop as projected, we will adjust the policy interest rate," adding, "I thought it was necessary to have more information regarding future wage trends, including next year's Chuntu. That was the reason for the cautious judgment."
The BOJ held a two-day Monetary Policy Meeting from the 18th to the 19th and decided to keep the benchmark interest rate at 0.25%. The BOJ ended its negative interest rate policy by raising the benchmark rate for the first time in 17 years in March, then increased it to 0.25% at the July meeting, but has kept it unchanged since.
Regarding the overseas economy, including the United States, he said, "The outlook remains uncertain," and added, "There is significant uncertainty about the economic policies of the next U.S. administration under Donald Trump." On the impact of tariffs under President-elect Trump's policies, he explained that "it is difficult to conduct quantitative analysis because it is unclear which countries and which goods will be subject to tariffs and to what extent."
On the recent weakening of the yen against the dollar in the foreign exchange market, he refrained from making specific comments on short-term market trends but said, "We will pay attention to the fact that the impact of exchange rates on prices is increasing compared to before."
Following the BOJ's decision to keep the benchmark interest rate unchanged, the dollar-yen exchange rate briefly surpassed the 156 yen level for the first time in a month in the Tokyo foreign exchange market. The yen's value declined as selling pressure on the yen and buying pressure on the dollar spread amid expectations of a widening interest rate gap between the U.S. and Japan.
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