Bank of Japan governor ready to raise interest rates if GDP and inflation growth resume

Bank of Japan Governor Kazuo Ueda said Tuesday that the country's central bank will raise interest rates if there are clear signs of a recovery in economic growth and price growth after a period of stagnation.

Ueda also announced the central bank's intention to continue reducing bond purchases even after the existing plan expires. The official emphasized the determination to stick to the course of slowly but steadily abandoning ultra-loose policy.

Ueda said the damage from higher US tariffs to Japan's economy would come mainly from lower exports, which could worsen corporate profits and consumer sentiment. A certain slowdown in household income growth is also likely to occur. Nevertheless, the central bank expects economic and wage growth to resume amid still moderately rising consumption.

Last year, the Bank of Japan stopped large-scale economic incentives and raised rates to 0.5% in January, expecting to soon reach the inflation target of 2%. According to a Reuters poll conducted May 7–13, most economists expect the Japan's regulator to keep rates unchanged until September.