The Bank of Japan is divided in interest rate discussions: Is it inflation or Trump's tariffs?

The Bank of Japan (BOJ) recently held a meeting that highlighted differing opinions on interest rate hikes. BOJ members are carefully assessing external risks posed by recent increases in U.S. tariffs, while balancing local inflation pressures and global trade policies. According to the meeting summary, there is a clear divide between those advocating for rate hikes in response to inflation trends and others who argue for a cautious approach due to global uncertainties.

Disagreements over interest rate increases have deepened among BOJ policymakers. Some members are calling for tighter monetary policy in light of rising inflation pressures in Japan, while others emphasize the need to consider global uncertainties stemming from increasing U.S. tariffs. The ongoing rise in food prices and anticipated wage increases for the 2025 fiscal year could pressure the BOJ to implement further rate hikes. One member noted that Japan's inflation target of 2% has been exceeded for nearly three years, necessitating a shift to a new phase of monetary policy.