Bank of Japan board member Naoki Tamura spoke earlier, post is here:
Recap:
Tamura signalled the possibility of stronger-than-expected interest rate hikes, warning that inflation risks may warrant “decisive” action even amid lingering uncertainty over U.S. trade policy.
In a speech delivered to business leaders in Fukushima, Tamura said underlying inflation had been progressing steadily toward the BOJ’s 2% target and was tracking slightly above expectations before U.S. President Donald Trump’s announcement of broad reciprocal tariffs in April.
While Tamura acknowledged the tariffs would temporarily weigh on Japan’s economy and prices, he maintained that consumer inflation would likely hover near the 2% level through fiscal 2027. He added that companies appear committed to continued wage and price increases, reducing the risk of inflation reversing course:
- good possibility our price stability target will be achieved earlier than expected
- suggesting the BOJ may need to act even if economic uncertainty remains elevated
- sais that when the likelihood of achieving our target increases, or when upside risks grow, we may face a situation where we should act decisively
The BOJ ended its ultra-easy monetary policy last year and raised rates to 0.5% in January, but the recent tariff shock has prompted the central bank to downgrade growth forecasts and tread more carefully on future hikes.
Still, Tamura noted that inflation expectations among firms and households—the key drivers of economic activity—appear to have already reached around 2%. He cautioned that policymakers must now monitor whether those expectations climb further.
USD/JPY dribbled a little lower on his speech:
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