BoJ's Uchida: at present, BoJ must support economy through accommodative monetary policy

BoJ's Uchida: at present, BoJ must support economy through accommodative monetary policy

Bank of Japan (BoJ) Deputy Governor Shinichi Uchida recently underscored the need for the central bank to maintain an accommodative monetary policy to support Japan's economy. In a speech delivered in Kochi, southwestern Japan, Uchida emphasized that while Japan's economy has recovered moderately, significant uncertainties, particularly surrounding trade policies, remain [1].

Uchida highlighted that the recent trade deal between the U.S. and Japan, which includes lower tariffs on Japanese cars, has provided some relief but has not entirely alleviated the economic uncertainties [2]. The deputy governor noted that the BOJ must adjust monetary policy to balance the risks and maintain stability in economic activity and prices. This stance aligns with the widely held market view that the BOJ will keep the benchmark rate unchanged at 0.5% in its upcoming policy decision on July 31 [1].

The deputy governor also stressed the importance of maintaining loose monetary policy to support the economy, stating that Japan's economic growth is likely to moderate due to trade and other policies. He added that the BOJ will continue to monitor the impact of U.S. tariffs and adjust its policy accordingly [2].

The BOJ's cautious approach to rate hikes reflects the high level of uncertainty surrounding trade policies and their potential impact on the economy. The central bank has indicated that it will raise interest rates in line with economic and price improvements, but this will depend on whether the economy and prices move in line with its forecast [2].

Uchida's comments come as the BOJ prepares to deliver its next policy decision and a new quarterly economic outlook report. The central bank aims to take an orthodox, robust monetary policy approach, especially given the extremely high uncertainties [2].

References:

[1] https://www.bloomberg.com/news/articles/2025-07-23/boj-s-deputy-chief-signals-no-rush-to-hike-rate-after-trade-deal
[2] https://www.mitrade.com/insights/news/live-news/article-6-978940-20250723