The Bank of Japan's meeting minutes hint: If trade frictions ease, interest rate hikes may resume
According to the minutes of the monetary policy meeting published on Tuesday, a minority of Bank of Japan members indicated that if trade tensions ease, the central bank will consider restarting the interest rate hike process. One member pointed out during the meeting: "Given the current high level of uncertainty, the Bank of Japan may temporarily maintain interest rates at their current level. However, it is also necessary to maintain policy flexibility and restart the interest rate hike cycle in a timely manner based on U.S. policy trends." At the policy meeting held on June 16-17, the Bank of Japan decided to keep the benchmark interest rate unchanged at 0.5% and announced plans to slow the pace of balance sheet reduction next year, demonstrating its cautious attitude towards exiting large-scale stimulus policies. The minutes show that despite inflation levels slightly exceeding expectations, most members believe that considering the economic downside risks brought by U.S. tariff policies, the central bank must maintain the current interest rate level. Some members specifically emphasized: "Due to strong wage growth and slightly higher-than-expected price increases, if there are signs of easing trade friction, the central bank may change its current wait-and-see stance and consider restarting the interest rate hike process."
According to the minutes of the monetary policy meeting published on Tuesday, a few members of the Bank of Japan indicated that if trade tensions ease, the central bank will consider restarting the interest rate hike process.
One member pointed out during the meeting: "Given the current high level of uncertainty, the Bank of Japan may temporarily keep interest rates unchanged. However, it is also necessary to maintain policy flexibility and restart the interest rate hike cycle in a timely manner based on U.S. policy trends."
At the policy meeting held on June 16-17, the Bank of Japan decided to maintain the benchmark interest rate at 0.5% and announced plans to slow down the pace of balance sheet reduction next year, demonstrating its cautious attitude towards exiting large-scale stimulus policies.
The minutes show that although inflation levels slightly exceeded expectations, most members believe that considering the economic downside risks brought by U.S. tariff policies, the central bank must maintain the current interest rate level.
Some members specifically emphasized: "Due to strong wage growth and slightly higher-than-expected price increases, if there are signs of easing trade friction, the central bank may change its current wait-and-see stance and consider restarting the interest rate hike process."
