Bank Of Japan Hikes Rates With A Wary Eye On Trump

1/24/2025 5:02:34 AM

(MENAFN- Asia Times) TOKYO – As bank of Japan Governor Kazuo Ueda mulls how to get interest rates away from zero, he's learning the hard way that the decision is up to a man 7,000 miles away.

US President Donald Trump's trade war threats are distracting the entire global Economy like a low-grade but persistent pain. The throbbing wasn't enough to derail this Friday's (January 24) rate hike in Japan, one that had been in the works for weeks.

The BOJ raised its benchmark rate by a quarter percentage point to 0.5%, the highest level since 2008. The yen gained as much as 0.7% to the dollar to 155.01 in early afternoon trading. Despite hiking three times in less than a year, the BOJ still maintains the lowest benchmark rate in the world, tied with the Swiss National Bank.

But Ueda's window to, as his team put it,“continue to raise the policy interest rate and adjust the degree of monetary accommodation” depends on its assumptions about the outlook bearing out.

It's the same phraseology the BOJ used in July when it last tightened. That, though, was back when Tokyo policymakers thought Trump 2.0 would never happen.

Now, all bets are off as Trump threatens to wreck Asia's 2025 with a barrage of tariffs, levies that would surely slam Japan's economy.

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