By Megumi Fujikawa

TOKYO--The Bank of Japan's policy board has become more cautious about uncertainties regarding U.S. economic policies, according to the summary of opinions of its March meeting, when the central bank left interest rates unchanged despite growing inflationary pressures at home.

"For the time being, it is appropriate for the bank to pay close attention to the policies of the new U.S. administration and their impact on the global economy and global financial and capital markets," one of the nine policy board members said at the meeting held on March 18 and 19.

The Japanese central bank maintained its policy rate at 0.5% at the meeting to take time to examine the effects of the hike in late January and await more clarity on the U.S. policies.

"Downside risks stemming from the United States have rapidly heightened recently and, depending on how tariff-related issues develop, it is quite possible that these risks will even have a negative impact on Japan's real economy," the summary quoted one board member as saying.

"In that case, the bank will need to be particularly cautious when considering the timing for raising the policy interest rate," the member added.

President Trump has announced 25% tariffs on all cars and key parts imported to the U.S. Economists expect the move to have a significant impact on the Japanese economy as cars and related parts account for a significant portion of the country's exports.

Japan's Finance Minister Katsunobu Kato said Friday that the government will continue to ask the U.S. administration to exclude Japan from the auto tariffs.

On the domestic front, the BOJ's policy board sees inflationary pressures heightening.

The increase in fresh food prices was likely triggered by a supply shock but may persist and affect inflation expectations, one board member said.

Government data released Friday showed that consumer prices in the Tokyo metropolitan area rose 2.9% in March from a year earlier, compared with February's 2.8% growth.

Prices of fresh food, rice and eating out continued to rise on the year. Underlying inflation measured by consumer prices, excluding fresh food and energy, grew 2.2% in March, faster than the 1.9% rise in February. Tokyo figures are considered an early indicator of nationwide trends.

Economists and investors expect the BOJ to raise interest rates again in the near future. Gov. Kazuo Ueda said this week that higher prices have hurt households and the central bank could consider an interest-rate hike if a rise in food prices leads to more widespread inflation.

The BOJ's opinion summary showed that one member said strong pay increases would support consumer appetite for spending.

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

(END) Dow Jones Newswires

March 27, 2025 21:27 ET (01:27 GMT)

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