Japan Interest Rate

The Bank of Japan should resume rate hikes after a temporary pause to assess the impact of U.S. tariffs on Japan’s economy, board member Hajime Takata said in a speech Thursday. “My view is that the BoJ is currently only pausing its policy interest rate hike cycle,” he noted, adding the bank should shift away from its ultra-loose policy after a period of "wait and see". Takata said Japan is nearing the 2% inflation target, helped by strong corporate earnings, labor shortages, and rising wages. While he expects this outlook to remain “broadly” unchanged despite President Trump’s sweeping tariff announcement on April 1, Takata stressed the need to monitor risks. “Given uncertainties regarding various U.S. policies remain high, the BoJ must conduct monetary policy in a more flexible manner without being too pessimistic." He also warned that if the Fed resumes rate cuts, it could reduce the BoJ’s policy flexibility. Still, Takata sees no signs of a U.S. recession akin to past crises.