By playing Kihara
Tokyo (Reuters) -A Governor Japan, Kazuo Ueda, said the central bank could need to take policy steps if US tariffs hurt Japan's economy, Sankei newspaper reported on Wednesday, signing the potential to delay the bank -shaking rate cycle.
Since February, risks around US President Donald Trump's policies have “moved more closely towards the poor scenario” the BOJ had anticipated, Ueda said in an interview, adding that recent developments have already affected corporate confidence and homes.
Ueda said the BOJ will continue to raise interest rates “at an appropriate pace” if economic and prices developments move in line with its projections.
“But we will scrutinize without pre-consequence to what extent US tariffs could hurt the economy,” he said. “A policy response may be required. We will make an appropriate decision in line with changes in developments.”
The comments reinforce the dominant scenery of the market that the BoJ will hold off while raising interest rates from the current 0.5% at its next policy meeting on April 30-May 1.
At the meeting, the BOJ will also release fresh quarterly growth and prices forecasts that will offer clues on the bank's monetary policy forecast.
“Ueda's comments underline the growing concern of the BOJ about the risks posed by Trump,” said Yusuke Matsuo, a senior market economist in Mizuho Securities.
“We keep our view that BOJ's next rate rise will come either in July or September” with a move in September now more likely than July, he said.
At the interview conducted on Monday, Ueda said that higher US tariffs were expected to hurt Japanese exports and could affect the feeling of home by intensifying uncertainty about the economic outlook.
“Although it is difficult to predict stock rate and exchange developments, we will carefully monitor how they affect the economy,” it was quoted to say.
On the price forecasts, Ueda said domestic food inflation is likely to moderate, while real wage growth is expected to turn positive and continue to rise from the middle of this year.
Ueda added that there were risks upside down and disadvantaged to the price forecasts. While continuous food inflation or disruption to a supply caused by US tariffs could increase prices more than expected, increasing living costs could cool use and keep prices from rising further, it was quoted to say.
The BOJ will look not only at data, but also surveys of companies in compiling the new quarterly forecasts due on May 1, Ueda told Sankei.