BOJ’s Nakagawa flagged U.S. tariff risks and said the upcoming Tankan survey will be key for assessing sentiment. The Bank is keeping a data-dependent stance, with markets still betting on another rate hike this year after its July inflation upgrade.
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Bank of Japan board member Junko Nakagawa warned that uncertainty over U.S. tariff policy remains a significant risk to Japan and the global economy. She pointed to the upcoming Tankan survey as a key gauge of how trade tensions are filtering through to corporate sentiment.
Nakagawa said the central bank would continue to scrutinize data closely and adjust monetary policy as needed. A former Nomura Asset Management chair, she is regarded as neutral on policy.
The background to her speech:
- The BOJ ended its massive stimulus last year and raised rates to 0.5% in January, judging that inflation was nearing its 2% target.
- Although the Bank held steady in July, it lifted its inflation forecasts and struck a more positive tone on growth, keeping alive expectations for another rate hike this year.
- A majority of analysts expect at least a 25bp hike before year-end, up from just over half in July
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