BOJ Governor Ueda Signals Cautious Stance on Rate Hikes Amid Economic Uncertainty

Bank of Japan Governor Kazuo Ueda has dismissed speculation about imminent interest-rate increases, emphasizing a data-dependent approach to policy adjustments. Speaking before a parliamentary committee on June 3, Ueda ruled out preemptive rate hikes merely to create policy space, stating such moves WOULD require clear evidence of sustainable economic growth and price stability.

The central bank maintains its ultra-loose monetary stance, though Ueda acknowledged potential adjustments if economic conditions align with projections. Okasan Securities’ Chief Economist Ko Nakayama suggests September as the earliest plausible timeline for policy changes, noting the BOJ’s careful balance between academic models and real-world economic pressures.

External risks loom large in the policy calculus. Ueda highlighted how recent U.S. tariff measures could dampen Japanese corporate sentiment, potentially affecting winter bonuses and next year’s wage negotiations. These developments may temporarily slow wage growth, adding complexity to the BOJ’s inflation targets.