Bank of Japan Governor: No Intention to Raise Interest Rates Without Actual Improvement in Economy and Inflation
Kazuo Ueda, Governor of the Bank of Japan, affirmed that the central bank will not significantly raise interest rates unless there is a clear improvement in economic performance and inflation rates. He highlighted that global uncertainty remains very high amid ongoing trade tensions, especially those caused by elevated U.S. tariffs.
During a parliamentary session, Japan’s Kyodo News quoted Ueda saying that the bank will not raise interest rates merely to create future room for monetary easing. He emphasized the bank’s commitment to a gradual policy approach based on economic and price developments, and that interest rate hikes will continue only if indicators move in line with expectations.
His remarks came after the Bank of Japan downgraded its economic growth and inflation forecasts for the current fiscal year, while keeping the short-term interest rate steady at about 0.5% during its May meeting — marking the second consecutive time it has done so.
Ueda noted that tariffs imposed by former U.S. President Donald Trump continue to cast a shadow over the global economy, potentially slowing growth and reducing profits for Japanese companies. This cautious environment influences the bank’s approach to future decisions on raising rates.
It is worth noting that the Bank of Japan began normalizing its monetary policy in March 2024 after years of unconventional easing, having raised interest rates three times since then — its first such moves in 17 years.
