By Leika Kihara
TOKYO (Reuters) -Some Bank of Japan board members saw scope to resume interest rate hikes after a temporary pause if developments over U.S. tariffs stabilise, a summary of opinions at their April 30-May 1 policy meeting showed on Tuesday.
While the board generally saw U.S. tariffs as hurting Japan’s economy, some said the damage was unlikely to derail the path toward sustainably achieving the BOJ’s 2% inflation target, the summary showed.
“The BOJ will enter a temporary pause in rate hikes due to slowing U.S. growth. But it shouldn’t be too pessimistic, and must conduct monetary policy in a nimble and flexible manner such as by resuming rate hikes in response to changes in U.S. policy,” one member was quoted as saying in the summary.
Another opinion said the BOJ’s policy path “may change at any time” because the outlook for Japan’s economy and prices could quickly turn positive or negative depending on developments surrounding U.S. tariffs.
“There’s no change to the BOJ’s rate-hike stance as our projection shows inflation achieving our 2% target and real interest rates are deeply negative,” a third opinion showed.
The remarks highlight the BOJ’s resolve to maintain its rate-hike stance despite the uncertainty over President Donald Trump’s tariff policy, as inflation remains above its target and a tight job market keeps pressure on firms to raise wages.
At the April 30-May 1 meeting, the BOJ kept interest rates steady at 0.5% and sharply cut its growth forecasts, suggesting uncertainty surrounding U.S. tariffs and the hit to exports could keep policy in a holding pattern for some time.
The BOJ’s rate review was held at a time when policymakers focused on global recession fears from Trump’s tariffs. But global stock markets surged on Monday after the U.S. and China agreed to slash steep tariffs for at least 90 days, de-escalating a potentially damaging trade war between the world’s two biggest economies.
The BOJ’s growth and price projections are only provisional and could be revised considerably in the future as how U.S. tariff policy unfolds, and how firms would respond, were both fluid, one member was quoted as saying at the May meeting.
The board also discussed an upcoming review in the BOJ’s bond taper plan, with one member calling for the need to scrutinise liquidity conditions for each maturity given recent “significant” rises in super-long yields, the summary showed.
At its next policy meeting in June, the BOJ will review its existing bond-taper plan that runs through March 2026, and come up with a taper plan for fiscal 2026 onward.
(Reporting by Leika Kihara; Editing by Sonali Paul & Shri Navaratnam)
