BOJ Governor: No Interest Rate Hike Without Clear Improvement in Economy and Inflation

Bank of Japan Governor Kazuo Ueda said on Tuesday that the central bank will not rush to raise interest rates significantly unless it expects economic and inflationary conditions to improve, noting that uncertainty remains “very high” due to heavy US tariffs.

Kyodo News Agency quoted Ueda as saying during a parliamentary session that the Bank of Japan will not raise interest rates simply to create future room for monetary easing, while affirming the bank’s commitment to continue raising rates if the economy and prices move in line with its expectations.

His comments came after the central bank lowered its forecasts for economic growth and prices for the current fiscal year and kept its short-term interest rate at around 0.5% for the second consecutive meeting in May.

Ueda noted that trade frictions stemming from heavy tariffs imposed by US President Donald Trump could slow the global economy and reduce domestic corporate profits, signaling a cautious stance on determining the timing of future interest rate hikes. It’s worth noting that the Bank of Japan, as part of its efforts to normalize monetary policy after a decade of unconventional monetary easing, has raised its key interest rate three times since March of last year, when it implemented its first increase in 17 years.