Bank of Japan holds rates, warning of uncertainty
TOKYO
The Bank of Japan left its key interest rate unchanged Wednesday in a widely expected move given the global economic uncertainty fuelled by U.S. trade tariffs.
Following a two-day policy meeting, the central bank said it was keeping its key interest rate at around 0.5 percent.
"There remain high uncertainties surrounding Japan's economic activity and prices, including the evolving situation regarding trade," a BoJ statement said.
The bank hiked rates in January to their highest level in 17 years on the back of bumper inflation in the world's fourth largest economy.
Since then U.S. President Donald Trump has imposed levies on multiple trading partners and imports including steel.
"I am worried about uncertainty regarding overseas economic and price trends," BoJ chief Kazuo Ueda told a parliament session last week when asked what concerned him the most.
"With the dust still settling from January's rate hike... the BoJ will want to gauge the impact of recent monetary policy changes on the economy before making its next move," Stefan Angrick of Moody's Analytics wrote in a note ahead of the policy decision.
"At the same time, a wave of tariff measures and threats from Washington have kept financial markets on edge, adding to the reasons for the BoJ to stand pat," he said.
SPI Asset Management's Stephen Innes said the Federal Reserve and Bank of England were also expected to hold rates this week "as policymakers take their first collective pulse check on the fallout from Trump's trade policies".
The BoJ is gradually normalising its policies following years of aggressive monetary easing to try to jump-start the stagnant economy.
But headline inflation has been above the bank's two-percent target every month since April 2022, and a year ago it finally lifted its interest rates above zero, before increasing them to 0.25 percent in July.
The Japanese flag flies over the Bank of Japan (BoJ) headquarters complex in central Tokyo on January 23, 2025. The Bank of Japan left its key interest rate unchanged on March 19 in a widely expected move given the global economic uncertainty fuelled by U.S. trade tariffs.
