TOKYO - The Bank of Japan decided at its monetary policy meeting on May 1st to keep its policy interest rate at the current level of around 0.5%, marking the second consecutive meeting since March in which rates were left unchanged.
At the same time, the central bank lowered its forecasts for both real GDP growth and consumer price inflation for fiscal 2025 and 2026, citing concerns over the global economic impact of renewed U.S. tariff hikes under the Trump administration.
Governor Ueda is expected to explain the rationale behind the policy decision during a press conference later in the afternoon. While reaffirming the Bank's commitment to achieving stable inflation around 2% year-on-year, Ueda is also likely to emphasize a cautious stance, prioritizing close monitoring of tariff negotiations between the U.S. and Japan as well as developments in global financial markets.
The downward revisions to the economic outlook were outlined in the Bank’s latest “Outlook for Economic Activity and Prices” report released the same day. The report reflects growing concerns that higher U.S. tariffs could exert downward pressure on Japan’s economy, particularly by hurting corporate performance in key manufacturing sectors such as automobiles and steel.
In January, the BOJ had raised its policy rate from around 0.25% to 0.5%, citing expectations of robust wage growth. However, in March, the Bank opted to leave rates unchanged due to heightened uncertainty surrounding the global economy.
Source: yahoo.co.jp
