BoJ's Takata: Central bank is currently only pausing its policy rate hike cycle

Bank of Japan (BoJ) Board Member Hajime Takata said on Thursday that the Japanese central bank is currently only pausing its policy rate hike cycle and it should continue to make a 'gear shift' after a certain period of 'wait and see.'

Key quotes

Impact of US Tariff policy will likely push down Japan's economy through such channels as a slowdown in overseas economies, a decline in domestic corporate profits, associated slowdown in wage increases.

Japan's corporate profits have remained on an improving trend recently

Consumption likely to continue increasing moderately.

Signs of home-made inflation have finally emerged in Japan.

I believe Japan's economy is at a stage where BoJ's price stability target is close to being achieved.

Will like to closely monitor whether the momentum toward achieving the price stability target, which has finally started to operate, will not be dampened by US Tariff policy.

I am paying particular attention to the possibility of significant market volatility, depending on the expectations for new US Trade policy.

Want to scrutinise whether speculation over US policy could lead to strong yen, hurt japan's corporate profits.

My view is that the BoJ needs to support economic activity for the time being by maintaining its current accommodative monetary policy stance. 

At the same time, I believe BoJ should gradually and cautiously shift gears in its monetary policy.

Market reaction

As of writing, USD/JPY is trading 0.09% lower on the day at 143.55.