BOJ’s Ueda Signals Flexible Approach Amid Global Tariff Uncertainty

Bank of Japan Governor Kazuo Ueda emphasized the importance of maintaining flexibility in monetary policy decisions, citing heightened uncertainty over global trade and tariff policies. Speaking before Japan’s parliament on Tuesday, Ueda said the central bank will consider raising interest rates if economic growth and inflation continue to align with the BOJ’s projections.

Ueda reiterated that any future policy adjustments will be data-driven and not based on rigid assumptions. “We’ll continue to raise interest rates depending on improvement in economic and price situations if the economy and prices move in line with our forecasts,” he stated.

However, Ueda warned against making premature judgments, stressing the need to closely monitor both domestic and international developments. “It’s important to closely monitor domestic and overseas economic, price, and financial markets developments and judge without any preset ideas, as uncertainties over trade policies of each country remain extremely high,” he added.

His remarks reflect growing global concerns about escalating trade tensions and protectionist measures, which could impact Japan’s export-driven economy. The BOJ, which ended its long-standing negative interest rate policy in March 2025, is now cautiously navigating its exit from ultra-loose monetary policy while ensuring economic stability.

With inflation showing gradual signs of stabilization and wage growth modestly improving, Ueda's comments suggest the BOJ is open to further tightening but remains wary of external risks. As markets assess the pace and trajectory of future rate hikes, investors will closely watch incoming data and BOJ signals in the coming months.

Ueda’s balanced stance underscores the BOJ’s commitment to policy flexibility amid a fragile global economic environment shaped by geopolitical tensions and evolving trade dynamics.