BoJ's Himino: But uncertainty remains for global economy

BoJ's Himino: But uncertainty remains for global economy

Bank of Japan (BOJ) Deputy Governor Ryozo Himino has stated that the central bank should continue raising interest rates despite global economic uncertainty. Speaking in Kushiro, northern Japan, Himino emphasized that while Japan's trade deal with the U.S. has helped alleviate economic uncertainty, the exact impact of U.S. tariffs remains unknown [1].

Himino cautioned that the global economy still faces high levels of uncertainty, suggesting that the BOJ is not in a hurry to raise borrowing costs further. He noted both upside and downside risks to the inflation outlook, with Japan's tight labor market potentially pushing up wages, but slowing global growth and U.S. tariffs weighing on prices [1].

The deputy governor indicated that the BOJ's baseline scenario, which involves raising interest rates in line with economic improvements, is likely to be realized. However, he stressed the need for continuous risk assessment to ensure that the BOJ can respond appropriately to any deviations from the baseline scenario [1].

Bank of Japan board member Junko Nakagawa echoed similar sentiments, highlighting the potential drag on the economy from U.S. tariff policies and the need to carefully assess data before making policy decisions. Nakagawa underscored the importance of the upcoming "tankan" business sentiment survey in gauging the impact of trade negotiations on Japanese businesses [2].

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, reflecting market expectations for a rate hike [2].

References:
[1] Reuters. (2025, Sept 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