Central bankers are navigating high uncertainty amidst fears of a US recession and a potential global trade war. Bank of Japan governor Kazuo Ueda noted that the rapid changes in US tariffs present challenges for predicting future economic conditions. Despite Japan's wholesale inflation at 4.0%, the BoJ maintained interest rates at 0.5%. President Trump's tariffs on steel and aluminium, alongside a temporary delay on tariffs for Canada and Mexico, further complicate the economic outlook. Overall, heightened uncertainties surrounding global trade policies pose risks to Japan's economy and price stability.
Ueda explained that there are aspects of U.S. trade policy we may not know even beyond April, emphasizing that uncertainty remains high.
In the weeks leading up to today's meeting, President Trump has imposed 25% tariffs on steel and aluminium imports to the US.
Trump has temporarily delayed tariffs on many goods from Canada and Mexico, adding to the trade policy uncertainty.
The BoJ cautioned that overseas uncertainty is sharply heightened, making it challenging to quantify the risks to Japan's economy.
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