BOJ may delay rate hike due to U.S. tariffs, gloomy projections for economic growth

From Yahoo Finance: 2025-06-18 22:46:00

The Bank of Japan may delay raising interest rates this year due to U.S. tariffs impacting the economy. The BOJ cut growth forecasts for fiscal 2025 and 2026, expecting U.S. tariffs to intensify. Japan’s exports dropped in May due to tariffs, potentially hindering economic recovery. The BOJ is unlikely to revise its forecasts in July without positive changes in U.S. tariff talks.

If U.S. tariff developments do not improve, the BOJ may struggle to revise its inflation forecast for 2026. The central bank expects core consumer inflation to slow down in the following year. The BOJ is monitoring corporate capital expenditure and wage hikes to determine the timing of any rate hike next year. The bank raised rates to 0.5% in January but has since maintained a cautious policy stance.

The BOJ’s decision on future rate hikes is complicated by the Middle East conflict and U.S. tariffs. Governor Kazuo Ueda is open to raising rates, but external factors are influencing the timing. Economists predict a 25-basis-point increase by early 2026. Former BOJ economist Seisaku Kameda is now with Japan’s Sompo Institute Plus, providing insight into the central bank’s forecasts.



Read more at Yahoo Finance: BOJ’s gloomy projections suggest no rate hike this year, ex-top economist says