BOJ policy board expected to lean toward keeping key interest rate unchanged

Policymakers at Japan’s central bank are expected to lean toward keeping the key policy interest rate unchanged at their current meeting due to US tariff measures and other factors. The present rate stands at around 0.5 percent.

The Bank of Japan opened its two-day policy board meeting on Wednesday. Nine senior BOJ officials, including Governor Ueda Kazuo, are believed to have discussed economic and price trends on the first day.

Prices have recently been on the rise in Japan owing to widespread wage hikes especially at large companies. Another factor is rising prices of rice and other products.

However, a growing number of BOJ officials say the pace of future economic growth and price increases could become slower than forecasts given up to now.

They say the imposition of tariffs by the US could prompt Japanese businesses to cut back on their exports and investments. Financial markets also remain volatile.

Japan and the US have already entered into tariff negotiations. On the other hand, friction between Washington and Beijing remains high. It is unclear to what extent the impact of US tariffs will escalate.

Analysts are closely watching how the BOJ policymakers will assess the impact of US tariffs. Attention is also focused on how they will steer their future monetary policy.