Trump tariffs may slow Bank of Japan rate hikes, potentially cutting economic growth

From Yahoo Finance: 2025-04-04 00:06:00

New U.S. tariffs may delay Bank of Japan’s interest rate hike plans, as they aim to avoid further yen falls. Analysts predict tariffs could cut economic growth by up to 0.8%. BOJ likely to cut growth forecasts and hold off on rate hikes due to global recession fears.

BOJ Deputy Governor states they will continue raising rates if economy meets forecasts, but markets doubt further rate hikes. Inflation has exceeded 2% target for nearly three years, prompting calls for continued rate hikes. Board members warn of food price surge and urge action against inflation.

BOJ watchers expect rate hike in third quarter, possibly in July. Quarterly outlook report after May 1 meeting will reveal how the board balances Trump tariff risks with domestic inflation. Former board member predicts one more rate hike to 0.75% in May or June, then pauses.

Read more: Analysis-Trump tariffs may delay, but won’t derail, Japan rate hikes