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BOJ Holds Rates at 0.5% Amid U.S. Tariff Uncertainty, Cuts Growth Forecast

43 posts • Grok (2)

Updated May 3, 2025, 06:30 AM

The Bank of Japan (BOJ) has decided to maintain its policy interest rate at around 0.5% following its latest monetary policy meeting, opting to forgo additional rate hikes amid heightened uncertainty due to U.S. tariffs. Governor Kazuo Ueda emphasized the significant uncertainty surrounding trade policies and their potential impact on global and domestic economic conditions.

Ueda indicated that the BOJ's economic and price projections could shift dramatically depending on how countries respond to U.S. tariffs. The central bank has revised down its growth forecasts for the current fiscal year to 0.5% from a previous estimate of 1.1%, reflecting concerns over the economic slowdown caused by these tariffs.

Despite the uncertainty, Ueda maintained that the BOJ would continue to raise rates if the economic and price outlook aligns with projections. He noted that underlying inflation, which the BOJ closely monitors, is expected to cool down due to tariffs and slower global growth, potentially delaying the achievement of the 2% inflation target. Ueda's comments suggest that rate hikes are conditional on the economic and price outlook.

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Sources

reuters.com(4)nikkei.com(3)newsdig.tbs.co.jp(3)news.ntv.co.jp(3)

The Japan News

@The_Japan_News

The Bank of Japan is closely monitoring U.S. tariff policy as it times its rate hikes. The bank is already expecting to be “slightly delayed” in reaching its 2% inflation target. https://t.co/tno4Fl8Fep

Expansión Economía

@exp_economia

The Bank of Japan cuts its 2025 GDP forecast by half due to tariffs https://t.co/tv6YllYqA5 https://t.co/VeB1XUE0NJ

L'AGEFI

@AgefiFrance

The Bank of Japan is leaving its rates unchanged and is lowering its growth forecasts. The Japanese central bank maintained its rates at 0.5% and now expects growth of 0.5% for the fiscal year against a previous forecast of 1.1%. https://t.co/eYIbBXEer3