Kuroda, Other Central Bank Chiefs Voice Concerns over Trade Tensions

June 21, 2018

Frankfurt- Bank of Japan Governor Haruhiko Kuroda and other central bank chiefs expressed their concerns on Wednesday over escalating trade tensions stemming from U.S. President Donald Trump's protectionist policy.

The intensifying trade conflict between the United States and China, in particular, is a "matter of great concern for Japan," Kuroda said during a panel discussion hosted by the European Central Bank in Sintra, Portugal.

The U.S.-China tariff war could affect supply chains in Asia, exerting a "quite significant" indirect impact on the Japanese economy, he stressed.

Kuroda expressed hopes that the tariff escalation "could be rescinded" and a normal U.S.-China trade relationship "would prevail."

"On trade, I think what's happening is incredibly disturbing," Reserve Bank of Australia Governor Philip Lowe said.

While pointing to difficulties at this point in assessing the impact of the intensifying trade tensions on monetary policy, ECB President Mario Draghi said there is "no ground to be optimistic on that." The ECB decided last week to scrap its current asset purchase program by the end of the year.

U.S. Federal Reserve Chairman Jerome Powell was careful in responding to the issue as his country is the epicenter of the ongoing trade disputes. Still, he suggested the possibility of growing concerns over the disputes affecting the Fed's economic outlook, which provides a basis for its policy management.

"Those concerns seem to be rising," Powell said.

On the domestic front, Kuroda said Japan maintains momentum toward achieving the 2 pct inflation target set by the BOJ, adding that the central bank will support companies in raising wages by leaving its massive easing policy intact. Jiji Press