Bank of Japan expects wages to rise despite impact of US tariffs

The Bank of Japan expects further growth of prices and wages, despite US tariff policy weighing on Japan’s GDP recovery, the central bank’s deputy governor Shinichi Uchida says. 

Additionally, the Japanese regulator is poised to proceed with rate hikes if the economy improves in line with the board's forecast, the official notes. 

Uchida claims that the country’s underlying consumer price index, as well as medium and long-term inflation expectations, are likely to remain temporarily flat. However, even during that period, wages are projected to rise further due to the tight job market, the official highlights. 

The Bank of Japan will scrutinize the economic impact of the US trade policy as uncertainty remains extremely high. Some board members see the possibility to resume rate hikes after a pause in case developments over US tariffs stabilize, Reuters reports. 

The officials believe the US administration’s duties hurting Japan’s economy will not keep inflation from reaching the 2% target.