- US policy, overseas economies, FX do affect Japan’s economy and prices
- So that must be taken into account in monetary policy setting
- Japan’s economy has recovered moderately but some weakness still seen
- Economy is facing mounting downward pressure due to US tariffs policy
- Momentum for wage hikes has accelerated but could weaken depending on US tariffs policy
- Companies are increasingly adopting wait-and-see stance on capex due to US tariffs
- Uncertainty over economic outlook is heightening
- Cautious monetary policy approach is necessary
- Hiking rates prematurely when growth is slowing could curb consumption
- It is extremely unclear how trade and other policies will unfold
TLDR: US tariffs have stuck a wrench in their plans. Now, they are on the sidelines waiting to see how tariffs will impact the economy and respond accordingly.
This article was written by Justin Low at www.forexlive.com.
