The governor of the Bank of Japan, Kazuo Ueda, declared in the early hours of Wednesday that the Central Bank may need to take policy measures if US tariffs harm the economy, according to Reuters.
Outstanding comments
You may need a policy response, but it will decide appropriately in line with changing developments, when asked about the Boj’s response if US tariff policy exerts low pressure on the Japanese economy.
The impact of the US tariff policy on the Japanese economy will be examined without any preconception, since it is already affecting business and household confidence.
From February onwards, the risks around the US tariff policy have approached the ‘bad’ scenario than the Boj had planned.
National food inflation is expected to be moderated, and that real wages stabilize in positive territory from the middle of this year.
Both risks are seen up and down in price perspectives.
Market reaction
At the time of writing, the USD/JPY torque is quoting 0.17% down in the day, quoting 143.00.
Japan Faqs Bank
The Bank of Japan (BOJ) is the Japanese Central Bank, which sets the country’s monetary policy. Its mandate is to issue tickets and carry out monetary and foreign exchange control to guarantee the stability of prices, which means an inflation objective around 2%.
The Bank of Japan has embarked on an ultralaxa monetary policy since 2013 in order to stimulate the economy and feed inflation in the middle of a low inflation environment. The bank’s policy is based on the Quantitative and Qualitative Easing (QQE), or ticket printing to buy assets such as state or business bonds to provide liquidity. In 2016, the Bank redoubled its strategy and relaxed even more policy by introducing negative interest rates and then directly controlling the performance of its state bonds to 10 years.
The massive stimulus of the Bank of Japan has caused the depreciation of the Yen in front of its main monetary peers. This process has been more recently exacerbated due to a growing divergence of policies between the Bank of Japan and other main central banks, which have chosen to abruptly increase interest rates to combat inflation levels that have been in historical maximums. Japan Bank’s policy to maintain low types has caused an increase in differential with other currencies, dragging the value of YEN.
The weakness of the YEN and the rebound in world energy prices have caused an increase in Japanese inflation, which has exceeded the 2% objective set by the Bank of Japan. Even so, the Bank of Japan judges that the sustainable and stable achievement of the 2%objective is not yet glimpsed, so an abrupt change of current monetary policy seems unlikely.
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
