By Megumi Fujikawa

TOKYO--Uncertainty about the impact of President Trump's policies and the U.S. economic outlook was one of the major topics discussed at the Bank of Japan's first meeting of the year, a summary of opinions showed on Monday.

"The policies of the new U.S. administration will gradually become clear, and they are likely to affect Japan's economy in various ways," one of the bank's nine policy board members said at the Jan. 23-24 meeting. "However, the resilience of Japan's economy as a whole has increased enough to withstand some downward stress."

Last month, the BOJ raised the policy rate to 0.5% from 0.25%, the highest level since October 2008. Gov. Kazuo Ueda said at a post-meeting news conference that the bank would reflect on the impact of U.S. tariffs on its economic outlook and policy making as details become available.

Over the weekend, the U.S. announced tariffs on Canada, Mexico and China. That sparked a volatile start to the week across Asian financial markets, with most benchmark indexes trading down. The Nikkei Stock Average was last down 2.3% and U.S. stock futures were lower. A lot of uncertainty remains around how U.S. trade policy will play out, and many economists expect destabilizing effects to ripple across global markets and economies.

The summary, which gives an anonymous record of the opinions expressed at BOJ meetings, quoted a board member as saying there is a possibility that inflation will resurge in the U.S. as trade frictions deepen simultaneously, triggering stagflation, a term used to indicate high inflation and low growth.

"The bank is not in a situation where it can manage such a scenario simply by conducting accommodative monetary policy," the member said.

Another opinion expressed among the BOJ board was about the monetary policies of the Bank of Japan and the Federal Reserve moving in opposite directions, causing concern about market fluctuations, particularly in foreign-exchange. But expectations about the Federal Reserve pausing rate cuts could help avoid such volatility, and give flexibility in the central bank's monetary policy making, the summary showed.

According to the document, the board also thinks it is necessary to raise interest rates further, something that Ueda and other officials have repeatedly said.

"With economic activity and prices remaining on track, risks to prices have become more skewed to the upside. It is therefore appropriate for the bank to adjust the degree of monetary accommodation in a timely and gradual manner," a board member said.

The BOJ's summary of opinions doesn't identify individual speakers.

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

(END) Dow Jones Newswires

February 02, 2025 21:03 ET (02:03 GMT)

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