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On June 20, 2025, customers check the vegetables and other products in the supermarket in Tokyo.
Kazuhiro Nogi | AFP | Gets the image
The main central banks went to their political level in the conditions of inflation after the COVID-19-Bank of Japan was greater.
He remained put in spite of heading and basic inflation Since April 2022, he has been working on the goal of 2% and despite two -year high inflation in January. The so -called “basic” inflation has been over the purpose since October 2022.
In 14 months since March 2024, Boj raised bets only by 60 basic points abandoned his policy negative interest rate. In the last policy meeting in June, he conducted his political level of 0.5%, saying that “the main inflation of the PCC is likely to be sluggish, mainly from the slowdown in the economy.”
US The Federal Reserve first collected rates since 2018 in March 2022And every large central bank, except for high tariffs this year.
In Japan, the main inflation engine is food prices, Specifically, prices for pic.
Prices for rice in the country rose sharply in the second half of 2024 and accelerated further in the first half of 2025, mainly from bad crops in 2023 and 2024.
In May, Prices for rice is more than double, 101.7%increase. This noted the greatest increase in more than half a century.
Marcella Chow, a global market strategist at JP Morgan Asset Management, noted that rice accounts for about half the major inflation of Japan, and future inflation trends are heavily dependent on food prices, especially rice.
Temporary rice is a spike?
But despite such a sharp rise in prices, the experts stated that BOJ would not switch to its political indicator, as the Central Bank views the splash of inflation as temporary.
Governor Boj Kazuo Wada said at a press conference after June in June that “when we consider the latest data, consumer inflation is moving about 3%. But this is mainly related to the rise of imports and rice prices … We expect such pressure to dissipate,” Comments translated by Reuters.
Chow JPM noted that Ueda also noted that the main inflation, greater attention to Boj, remains below 2%. Boj does not publicly reveal the components that determine the “basic inflation”.
“This indicates that the Central Bank considers the recent splash of rice prices,” she said, adding that “Mr. Wada does not think that Boj is lagging, given that the trend of main inflation is not accelerated.”
Yujiro Goto, Head of the Monetary Strategy Department in Japan in Nomura, said CNBC that the current inflation spike, especially in the field of food inflation, is mainly related to nutrition problems, not in high demand.
“So, Boj is judging that the bank does not need to respond to the splash of inflation, which is simply inflation. Depending on the costs, raising rates cannot be very effective for slowing inflation,” Goth said.
This opinion is supported by Kay Okamura, a portfolio managers at Neuberger Berman, who said ‘A boxed box as Asia“This pressure on food prices is probably faded over the next few months.
Growth problems
Growing problems is another big reason that Boj is probably holding back rates.
On Wednesday, Boj’s resumes since June showed that some board members have expressed that the rates should be maintained at the current level.
Higher rates usually help to stop inflation, but they can also contain economic growth.
Chow noted that there would be geopolitical uncertainty for the country, including the upcoming elections in the upper house, as well as tariff and trade uncertainty. Political problems for the Ishichi administration may present, she said.
Those who can create risks to growth, which means that raising policy can come later, not earlier.
Goth Nomur also believes that growth problems will restrain Boj from hikes, believing that Japan has not reached the agreement with the United States to trade.
“Due to higher tariffs for Japan (10% universal tariffs plus industry tariffs, such as car and steel), we expect the Japanese economy recorded (a) a small negative growth in July-September, which requires pause, at least this September,” he said CNBC.
Currently, Japan has been recorded in trade negotiations with the US without a clear sign of the agreement. June 20 is the main trade negotiator of the country Reportedly Ryosei Akazawa said These trade negotiations with the US “remained in the fog”.
If both sides do not reach the deal, 25% “mutual” tariff will be cut into Japanese imports in the US
The Boj is confronted with a tough and narrow way that needs raising fast enough to prevent inflation expectations, but not too fast to see that the economy reaches its former deflation.
Frederick Noiman
Chief Economist Asia, HSBC
Increasing the level can strengthen the yen, which will make Japanese exports less competitive and limit growth at a time when export -oriented economics faces wind.
In the country Latest trading data It turned out that Japan’s exports decreased by 1.7% in May, which noted the sharpest decline since September 2024.
The gross domestic product of Japan also For the first time in the year decreasedFalling by 0.2% of the quarter a quarter of the three months, which ended when exports decreased dramatically.
“Hard, narrow way forward”
Boj can also take lessons from history. Frederick Neuman, Chief Economist of Asia in HSBC, said CNBC that Boj has survived decades of sustainable deflation and “several episodes of false dawn that caused premature delay.”
Thus, the bank takes its time to normalize politics. Neuman noted that Boj takes a slow approach to raising because Increasing inflation is mainly due to the sharp cushioning of the Japanese yen, only “a preliminary sign of a sustainable salary cycle”.
However, Boj Naoki Tamura’s board member said in a speech on Wednesday that the bank may need to increase the interest rates “decisively” if the risks increase.
Since April 2022 Japanese yen A weaker of about 120 yen against the dollar up to the current level is about 150. In 2024, the currency weakened on July 3 to 161.99, which noted its weakest level in about 38 years.
Separately, said Neimon, “the inflation period may probably be required to get rid of Japanese households and businesses with the expectations of a limited increase in prices over time.”
He said that, despite the fact that the Go-IT-SLOW’s Boj approach is justified, Japanese monetary officials should be with care to normalize the policy.
“Boj is confronted with a hard and narrow way, which needs lifting quickly enough to prevent the shooting of inflation expectations, but not too fast to see that the economy reaches its former deflation.”
