BOJ Chief: Japan Can Weather US Tariff Impact

Bank of Japan Governor Kazuo Ueda stated that Japan's economy can withstand the impact of tariffs imposed by the United States while maintaining its cycle of rising inflation with wage growth. During a speech on Tuesday, Ueda acknowledged that the tariff policies would create downward pressure on Japan's economy through multiple channels. He noted that corporate and household sentiment has already begun to show signs of deterioration in response to these trade measures.

Ueda specifically referenced uncertainty surrounding trade policies implemented by President Donald Trump's administration as potential factors that could negatively affect Japanese exports. These policies might also cause companies to delay capital expenditure plans and discourage wage increases, according to the central bank chief. Despite these concerns, Ueda expressed confidence that historically high corporate profits would serve as a buffer against these economic pressures.

The Bank of Japan leader indicated that the country remains on track to achieve its 2% inflation target, despite temporary stagnation in underlying consumer inflation. Ueda maintained that progress toward the price target continues to gain momentum, suggesting the central bank remains prepared to implement further interest rate increases. This stance comes as Japan experiences what Ueda described as a sustainable trend of wages and prices rising in tandem.

Ueda also addressed recent developments in global trade relations, noting that markets viewed positively an agreement between the United States and China to reduce reciprocal tariff rates. However, he emphasized that significant uncertainty regarding the overall trade outlook persists. The central bank governor's remarks reflect Japan's ongoing navigation of international trade tensions while maintaining focus on domestic economic stability and monetary policy objectives.