Bank of Japan to continue increasing interest rates in case of economy stabilization after US tariffs

The Bank of Japan (BOJ) will continue to increase interest rates if the economy recovers after the introduction of new tariffs from the US presidential administration, the Central Bank's deputy governor Shinichi Uchida said. Moreover, he warned of high uncertainty in the regulator's near-term forecasts and assumed the country's inflation rate would remain at 2%.

According to the published data for the first quarter of 2025, the BOJ noted a contraction in the economy that exceeded early forecasts. These changes reflect the instability of the Japanese economy in the face of new duties from the US.

Previously, the country's financial regulator had already raised rates to 0.5% earlier this year. However, due to current fears of economic slowdown, the Bank of Japan reduced its forecasts for monetary policy tightening during its May 1 meeting.