BOJ and Current Economic Environment: Updated March 30, 2025.

BOJ viewed current economic environment 'appropriate' for rate hike

Article source: https://mainichi.jp/english/articles/20250325/p2g/00m/0bu/017000c

Ideas:
The Bank of Japan might be discussing the further increase of rate hikes but that doesn't mean they are going to do it. Recently they have suggested due to the situation in the US they might hold back on any further rate hikes.

And yes, the Japanese economy is improving and yes prices might be either beginning to slow down and or not increasing significantly at this time, and yes, wage negotiations are moving in the right direction which the BOJ is looking for.

But again, as the current US administration is suggesting 25% tariffs on foreign cars not make in the US has got to be making the Bank of Japan to think twice about rate hikes.

The Bank of Japan increased the rate, yes, but now they might be thinking twice when to do it again as the US and global situation is now more tenuous.

The Bank of Japan is usually very conservative, as is most central banks, so don't expect them to make any sudden or rash moves until they feel the environment is correct, which could take some time now due to the current US administration's tariff moves.

The current situation might need to be coordinated with both the Japanese government and the Bank of Japan as the situation is going to be very tricky and it might not be much of a  stretch so see Japan also using tariffs like Canada is doing.

Since this article has been released the US situation has become much more tenuous as there are a lot of rumblings going on now. All that is happening in the US might not be affecting that Japan that much but it could easily begin to spill over into the Asia-Pacific region soon.

The world is highly interconnected now and what happens in one country could easily affect many other countries so no country is safe or an island to itself.

Take for example the tariff situation and global supply chains which all could be significantly affected as all cars these days are not made in just one country but many parts of a car are made everywhere globally, so the tariff situation could have some lateral affects affecting many in the global supply chains.

Japan is a resource-poor country which means it has to import much of what is needs and  the weak Japanese yen is causing import prices to be higher than normal. 

Real wages in Japan is what Japanese households actually have and use and not nominal wages are wages that includes inflation.

Global trade is very delicate situation with supply chains running almost all countries these days, and the "America First" policy is not going to work for global trade. 

Back before the Great Depression the US flirted with the same policy and look what finally happened in 1929 and all through the 1930's. It took WW2 to get the US out of that policy and lets hope the same thing is not going to happen again.

Yes, Japan is a very staple economy, but what is going to happen with tariffs on Japanese cars and global supply chains could disrupt all countries including China. How disruptive is it going too be. Lets hope its not going to turn into a global recession or worse.

All that is happening in the US now could become very significant as for example, foreign tourists to the US could drop of significantly, which then means many US businesses will begin layoff workers which means it could turn into something much worse. 

And then with the tariff situation many foreign car dealerships could potentially go out of business if US consumers can't afford foreign cars, even though they want to buy them, and it could get even worse as the dominos will begin to affect many businesses, and then it could potentially begin to spill over to other economies and their economies could become affected, as again all economies these days are all connected.

So now the Japanese government and the Bank of Japan have a lot to think about related to how they are going to handle the situation.

Have a nice day!