Kazuo Ueda, Governor of the Bank of Japan, has drawn a clear line, stating that he will not pursue aggressive policy rate hikes in situations where the outlook for the economy or inflation remains uncertain.
According to Kyodo News on June 3, Governor Ueda stated at the House of Councillors' Committee on Financial Affairs that day, "I do not intend to raise interest rates in order to create room for rate cuts in the future."
Governor Ueda said, "There is extremely high uncertainty regarding the United States' tariff policy," and added, "Trade conflicts could lead to a slowdown in overseas economies and a decline in corporate profitability, so we will carefully consider the timing of any rate hikes." He also reiterated his previous stance, saying, "If the economy or inflation moves in line with our projections, we will continue to raise the policy rate."
At its Monetary Policy Meeting in March last year, the Bank of Japan raised rates for the first time in 17 years, ending its negative interest rate policy. This move was aimed at breaking away from the monetary easing policy of keeping rates low and increasing the money supply to revive Japan's deflationary economy. In line with this approach, Japan also raised rates in July last year.
However, due to uncertainties in the economy and inflation, the Bank of Japan kept its benchmark rate unchanged at 0.5% for the second consecutive time on May 1, taking into account factors such as U.S. tariff policy.
The Bank of Japan's next Monetary Policy Meeting is scheduled for June 16-17.
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