Bank of Japan kept interest rates unchanged amid US tariff policy uncertainty

The Bank of Japan kept interest rates unchanged at 0.5%. According to Reuters, policymakers plan to assess the impact of US import tariffs on Japan's export-dependent economy.

In addition, the central bank's decision was driven by concerns about a slowdown in global GDP growth due to Donald Trump's trade policy. Meanwhile, data on wages and prices in Japan show progress in achieving the regulator's inflation target of 2%, the news agency says. 

Uncertainty over the US president's tariff plans is already weighing on the economy of the Asian country. A Reuters poll showed local manufacturers’ business sentiment deteriorating in March.

Japan’s GDP growth and inflation dynamics remain uncertain due to risks associated with the effects of global trade tensions, the central bank states.

The regulator plans to raise interest rates further if price developments and GDP growth meet forecasts. More than two-thirds of economists surveyed by Reuters expect the Bank of Japan to hike the borrowing costs to 0.75% in the third quarter of this year, most likely in July.