BOJ Governor Backs Rate-Hike Stance but Stays Cautious About Tariff Impact

By Megumi Fujikawa

TOKYO--Bank of Japan Gov. Kazuo Ueda reaffirmed his stance of seeking further interest-rate hikes while also promising to pay careful attention to the impact of trade frictions on the Japanese economy.

"We need to be very cautious about growing uncertainty surrounding the future development of trade policies in each country," Ueda said in a speech Wednesday at an event held by the Trust Companies Association of Japan.

The Japanese central bank faces challenges in steering monetary policy, as higher U.S. tariffs risk slowing economic growth, while inflationary pressures remain in Japan, weighing on consumer sentiment.

The BOJ maintained its policy rate at 0.5% in March amid the high uncertainty over U.S. trade policy. The bank's next meeting is scheduled to be held on April 30 and May 1.

Market expectations for an immediate interest-rate increase have receded as President Trump's steep tariffs took effect.

A look at the domestic economy, however, shows some bright signs, including big pay raises major Japanese companies have pledged this year--which will likely lead to the smooth functioning of a positive cycle of income, spending and mild inflation.

Write to Megumi Fujikawa at megumi.fujikawa@wsj.com