By Megumi Fujikawa

TOKYO--Bank of Japan Gov. Kazuo Ueda said Wednesday that the central bank should comprehensively assess the impact of President Trump's policies before incorporating them into its economic forecasts.

"We cannot understand the impact [of Trump's measures] on Japan unless we see the whole picture--such as how the overall package, instead of individual policies, would look like and what kinds of policy developments are causing currency fluctuations," Ueda told a parliamentary committee.

However, Ueda noted that it remains difficult to determine the economic effects of U.S. policy changes. Financial markets have been unsettled after Trump approved 25% tariffs on steel and aluminum imports to the U.S.

Despite global uncertainties, many economists expect the central bank to raise its policy rate again later this year from the current 0.5%, as continued wage growth is likely to sustain mild inflation.

Ueda said the size of an interest-rate hike would depend on economic conditions, indicating that each increase wouldn't necessarily be limited to 25 basis points.

The BOJ governor also stated the central bank would consider further reducing its government bond purchases in a flexible and predictable manner. The bank plans to evaluate the impact of the reduction in June.

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

(END) Dow Jones Newswires

February 11, 2025 22:53 ET (03:53 GMT)

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