Japan PPI inflation slips to 11-mth low in July
Investing.com -- The Bank of Japan (BOJ) could increase interest rates in March if U.S. President Donald Trump implements his proposed tariffs, intensifying domestic inflation, says Sayuri Shirai, a former member of the central bank’s board.
This statement was made on Friday, in response to Trump’s tariff threats on imports from Canada, Mexico, and potentially European goods.
At the start of February, new tariffs on imports from Canada and Mexico were delayed for a month. However, a 10% tariff on all Chinese imports has been implemented. These tariffs could escalate global inflation, according to Shirai.
Shirai indicated that the BOJ is likely monitoring the tariff situation closely. March could be an appropriate time to increase rates, given the current high domestic inflation. This information was shared during an interview with Shirai.
Despite the broader Japanese economy’s weakness, Shirai argues that the central bank must continue to raise interest rates to counter the weak yen, which is a significant factor in the rising costs of food and energy.
Shirai, currently a professor at Japan’s Keio University, stated that Japan is experiencing cost-push inflation largely due to the weak yen. If this weak yen is exacerbating inflation and causing significant issues for Japan’s economy, the BOJ should acknowledge this and continue to raise rates, she said.
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