According to Reuters, the Bank of Japan (BoJ) is likely to keep its interest rate unchanged at 0.5% at the upcoming meeting on June 17. However, experts do not rule out the possibility of officials adopting a more hawkish stance if global trade tensions ease amid US-China talks.
The Japanese central bank might also slow down the reduction in its bond purchases starting next fiscal year. This would show that the BoJ is taking a cautious approach amid heightened uncertainty. The regulator's monetary policy remains quite loose, while the economy still needs support. So, officials are trying to avoid any market shocks, Reuters notes.
After the threat of Trump's import tariffs on export-oriented Japan temporarily receded, investors postponed their expectations for interest rate hikes to a later date.
The issue of US-Japan relations remains unresolved. However, the United States' willingness to negotiate with key trading partners has eased concerns about the Asian country's economic prospects, Reuters concludes.