The Bank of Japan, the Central Bank of Japan, decided to keep the benchmark interest rate at 0.5% on the 19th. However, the possibility of further rate hikes depending on future economic conditions has been raised.
After concluding a two-day monetary policy meeting, the Bank of Japan noted in a statement, "The uncertainties surrounding Japan's economy and prices, including the movements of each country's trade policies and the effects on overseas economies, as well as trends in prices and resource prices, remain high." This seems to take into account the increasing economic uncertainty due to the United States' tariff policy.
Previously, in the January monetary policy meeting, the Bank of Japan raised the short-term policy interest rate, which is the benchmark interest rate, from "around 0.25%" to "around 0.5%." The financial markets had anticipated that the Bank of Japan would keep the interest rate unchanged in this meeting to gauge the impacts of the January rate hike decision and the Trump administration's economic policies.
However, since the Bank of Japan has expressed its intention to raise rates again if the economy and prices move within the expected range, it is reported that there is a high possibility of further rate increases in the future.
In particular, the sharp rise in rice prices and other inflationary trends are analyzed as factors supporting the outlook for rate hikes. Kyodo News reported, "The high wage increase rates centered on large corporations in the wage negotiations for spring 2025 will act favorably for rate hikes," adding, "If the Trump administration imposes tariffs on Japanese automobiles, it will significantly impact the industry, and it is necessary to pay attention to this matter."