On May 8, the minutes of the Bank of Japan's (BOJ) March meeting showed that the agency's policymakers were deeply divided on the appropriate time to continue raising interest rates, amid growing uncertainty about US tariff policies.
A member of the meeting said: "The risk of economic decline due to US policies has increased sharply and if tax policies continue to be implemented, it is likely that these risks will have a significant negative impact on the real economy of Japan".
Accordingly, this member said that the BOJ "needs to be especially cautious when considering the timing of the next interest rate hike".
However, another member argued that even if uncertain, the BOJ does not always have to maintain monetary policy too cautiously. Maybe it is time for the BOJ to take decisive action, he stressed.
Another view is that in upcoming policy decisions, the BOJ should take into account inflation expectations of businesses and households, price risks as well as the level of salary improvement.
At the policy meeting held on March 18-19, the BOJ decided to keep the benchmark interest rate unchanged at 0.5%. Governor Kazuo Ueda later warned of rising global uncertainty, noting that escalating food costs and higher-than-expected wage gains could push core inflation in Japan higher.
Last week, the BOJ continued to keep interest rates unchanged, while Ueda admitted that the timing for core inflation to approach the central bank's 2% target "had been somewhat delayed". This is understood that the BOJ is temporarily suspending the interest rate hike roadmap to monitor further developments from US tariff policies.
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