BOJ official says rate hike cycle to resume after pause

Bank of Japan (BOJ) Board Member Hajime Takata says interest rate hikes will be resumed after a pause. The official keeps his hawkish tone even after Donald Trump threatened to impose higher tariffs on Japanese goods. 

The US President has put forward the idea of raising duties to 35%, compared to the previous plan to increase them to 24%, Bloomberg reports. Takata says the Bank of Japan may need to respond to these changes in US trade policy by resuming the monetary tightening cycle. His comments point to a possibility of another rate hike this year, depending on the effect of tariffs, Bloomberg notes. 

Takata believes that despite the resilience of Japan’s economy, lingering concerns over US import duties could weigh on economic activity. At the same time, he notes rapid price growth. A key measure for the cost of living reached a new two-year high in May. 

The Bank of Japan will hold its next meeting on July 31. More than 90% of BOJ watchers expect interest rates to remain at 0.5%, according to a Bloomberg poll.