On Thursday, the Bank of Japan (BOJ) kept its key interest rate unchanged, rebuffing calls for a rate hike in the wake of Trump’s tariff concerns. That includes a slump in the yen and slowing growth ahead of parliament’s return to Tokyo for a pivotal session next week.
According to the Japan Times, the Bank of Japan's decision came after a two-day policy meeting. At the meeting, analysts were divided on whether to raise interest rates to 0.5 percent or keep them at the current 0.25 percent.
Markets had already started to price in the Bank of Japan’s decision, but then took a pause. This is a cautious move after two rate hikes in 2024 ended a year-long freeze on negative interest rates.
The Bank of Japan Governor will discuss the bank's further moves.
The uncertainty is compounded by the threat of further tariffs on Chinese, Canadian and Mexican goods. The trade strategy, promoted as a tool to prevent illegal immigration and drug trafficking, raises questions about whether it could encourage the start of a more general assault on the global trading system.
Markets are awaiting Bank of Japan Governor Kazuo Ueda's updates on the bank's next moves when he addresses the decision later.