Published by Global Banking & Finance Review®
Posted on February 27, 2025
3 min readLast updated: January 25, 2026
Add as preferred source on Google
BOJ Governor Ueda warns of global uncertainty from US tariffs, impacting economic outlook and monetary policy. Japan's growth may prompt rate hikes.
By Leika Kihara
CAPE TOWN (Reuters) -Bank of Japan Governor Kazuo Ueda on Thursday warned of "very strong" uncertainty on the global economic outlook that required vigilance in setting monetary policy.
Speaking after attending the Group of 20 finance leaders' meeting in South Africa, Ueda said many members appeared to share the view there was uncertainty over how U.S. tariff policies could unfold, and how such moves could affect their economies.
"There is very strong uncertainty on the U.S. policy outlook, including on tariffs, and how other countries could respond. As such, we need to scrutinise developments," Ueda told a news conference after the G20 meeting.
"We then need to take a comprehensive view on how (the U.S. policies) affect the global economy, financial markets and Japan's economic and price outlook" in setting monetary policy, he said, when asked how global uncertainties could affect the BOJ's interest rate decisions.
The G20 finance leaders ended their two-day meeting on Thursday without consensus or a communique after top officials from several countries, including the U.S., skipped it.
A "chair's summary" released by South Africa said while many parts of the global economy have shown resilience, growth patterns remained divergent across economies. It also said the group's discussions covered "a diverse array of downside risks" such as geopolitical tensions, economic fragmentation and rising protectionism.
Despite such risks, there are growing market expectations that recent data showing Japan's solid economic growth and sticky inflation will prod the BOJ to raise its short-term interest rate further from the current 0.5% level.
Growing market bets of a near-term BOJ rate hike have helped push up the yen, offering some relief for Japanese policymakers who fret about the pain the currency's weakness has inflicted on households and retailers through rising import costs.
In a sign the government has no issues with yen gains driven by further rate hikes, Japan's top currency diplomat, Atsushi Mimura, said on Wednesday he did not see any disparity between recent rises in the yen and a slew of positive economic data.
Bets of an early BOJ rate hike have also pushed up Japanese government bond yields.
Ueda declined to comment on recent rises in long-term interest rates, but he reiterated the BOJ's readiness to conduct emergency bond-buying operations if bond yields spike in an unusual fashion.
The BOJ ended a decade-long massive stimulus last year and raised its short-term interest rate to 0.5% from 0.25% in January on the view that Japan was on the cusp of sustainably achieving its 2% inflation target.
BOJ policymakers have signaled the central bank's readiness to raise rates further if Japan continues to make progress in durably achieving its 2% inflation target.
A majority of economists polled by Reuters expect the BOJ to hike rates once more this year, most likely during the third quarter. The BOJ will hold an interest rate review on March 18-19.
(Reporting by Leika Kihara; editing by Alexander Winning, Mark Heinrich and Paul Simao)
Kazuo Ueda warned of 'very strong' uncertainty regarding the global economic outlook, particularly due to U.S. tariff policies.
The G20 finance leaders ended their meeting without consensus or a communique, as several top officials, including from the U.S., skipped it.
There are growing market expectations that the BOJ will raise its short-term interest rate further, potentially during the third quarter of this year.
Expectations of a near-term BOJ rate hike have pushed up the yen, providing some relief to Japanese policymakers concerned about the currency's weakness.
Ueda declined to comment on recent rises in long-term interest rates but emphasized the BOJ's readiness to conduct emergency bond-buying operations if necessary.
Explore more articles in the Finance category
