FX.co ★ BoJ Eyes Further Tightening Amid Trade Progress, Inflation Worries

The Bank of Japan is set to continue its strategy of increasing interest rates as the economic landscape and inflationary conditions show signs of improvement, stated Deputy Governor Shinichi Uchida in a recent address. "The bank intends to persist in elevating the policy interest rate while adjusting the level of monetary support," Uchida remarked. His statement coincides with renewed optimism for further monetary tightening after advancements in Japan-U.S. tariff discussions. As part of the trade agreement, Japan will channel investments amounting to $550 billion into the U.S. Previously, the Bank of Japan had halted rate increases due to trade-related uncertainties; however, current inflationary pressures are beginning to affect consumer spending negatively. The policy board plans to convene next week to revise their economic and inflation forecasts. Concurrently, Prime Minister Shigeru Ishiba is reportedly considering resignation following a significant electoral defeat. He has informed his aides that a final decision will be made upon the conclusion of trade negotiations, preceding the August 1 deadline for tariffs.