FX.co ★ BoJ Eyes Risk from U.S. Tariffs: Board Member Nakagawa

U.S. trade policy presents a significant threat to Japan's economic outlook, according to Junko Nakagawa, a member of the Bank of Japan's (BoJ) board. In her recent speech, Nakagawa highlighted the potential adverse effects of increased U.S. tariffs on Japanese corporations, which could impact exports, production, capital investment, sales, and profitability. Additionally, she noted that there could be indirect consequences, such as diminished business and consumer confidence, or fluctuations in commodity prices and financial markets. These concerns resonate with those of BoJ Governor Kazuo Ueda, who raised similar issues during a parliamentary session. Given the growing economic uncertainty, the BoJ might consider pausing or decelerating its interest rate hikes. Nonetheless, Nakagawa reiterated the bank’s readiness to increase rates, assuming the economy and inflation progress as anticipated. Concurrently, Ryosei Akazawa, Japan's Economy Minister, is currently engaged in trade discussions in Washington. This comes as U.S. President Donald Trump announced "significant progress" following his surprising involvement in the negotiations.