Bank of Japan signals potential pause in interest rate hikes due to US trade policy

The Bank of Japan (BOJ) has expressed concerns that trade conflicts could hinder global economic growth. BOJ Governor Kazuo Ueda noted heightened uncertainty stemming from Washington's recent actions. Bloomberg reports the central bank may delay further monetary tightening in response to new US import tariffs.

According to the BOJ's report based on feedback from branch managers, the country's economic condition is contradictory. While maintaining an overall positive assessment of domestic growth, many executives expressed growing concerns among businesses about potential trade restrictions.

The probability of a June rate hike has dropped from 50% to less than 30% because of the US protectionist policy, Bloomberg reports. Analysts now expect a more cautious approach from Japan's central bank regarding any policy changes.