BoJ's Himino: US-Japan trade deal lowers uncertainty

BoJ's Himino: US-Japan trade deal lowers uncertainty

Bank of Japan (BOJ) Deputy Governor Ryozo Himino has expressed optimism about the impact of the US-Japan trade deal on economic uncertainty. Speaking at an event in Kushiro, northern Japan, Himino emphasized that while global economic uncertainty remains high, the trade agreement has helped alleviate some of the economic concerns [1].

Himino acknowledged that the exact impact of US tariffs is still unknown, but he noted that the risk of a larger-than-expected impact is a significant factor to consider. He highlighted that Japan's tight labor market may push up wages, which could contribute to inflation, but slowing global growth and the hit to Japan's economy from higher US levies could weigh on prices [1].

The deputy governor stressed that the BOJ will continue to raise interest rates if the economy moves in line with its forecasts, but he emphasized the need to carefully assess data and risks. Himino stated that the central bank will continually evaluate the balance of risks and respond in a timely and appropriate manner to ensure that any deviations from the baseline scenario are well contained [1].

In a separate statement, BOJ board member Junko Nakagawa echoed similar sentiments. She warned that persistent uncertainty stemming from US tariff policies could weigh on business and household sentiment, potentially dragging down the Japanese and global economy. Nakagawa underscored the importance of the BOJ's upcoming "tankan" business sentiment survey to gauge the impact of trade negotiations on Japanese businesses [2].

The BOJ raised interest rates to 0.5% in January, and while it kept rates steady in July, market expectations for a rate hike this year remain strong. Nearly two-thirds of economists polled by Reuters expect the BOJ to raise its key interest rate by at least 25 basis points later this year [2].

References:
[1] Reuters. (2025, September 2). BOJ must keep raising rates, focus on global uncertainty - deputy governor. Retrieved from https://www.reuters.com/markets/asia/boj-must-keep-raising-rates-focus-global-uncertainty-deputy-gov-says-2025-09-02/
[2] Zawya. (2025, July 1). BoJ's Nakagawa warns of trade policy risks, looks to tankan for guidance. Retrieved from https://www.zawya.com/en/world/china-and-asia-pacific/bojs-nakagawa-warns-of-trade-policy-risks-looks-to-tankan-for-guidance-wl911c1x