OR Bank of Japan (Boj) kept the interest rates She expressed her concern about the possible impact of global commercial friction in the Japanese economy.
In a widely expected move, today (19.3.2025) the Bank of Japan maintained its one -day interest rate target at 0.5%. Boj made its third interest rates in late January, following the end of the world’s last negative political interest rates in March 2024.
This restraint was expected by market participants and economists, who expect that the Central Bank would consider the possibility of raising interest rates every six months, as data show that Japan’s economy is growing in line with its expectations, the Wall Street Journal said.
The YEN has slightly faded against the dollar after Boj’s announcement, but has stabilized as market players insist on the view of raising interest rates. In a statement published along with the decision, the Japanese Central Bank confirmed its expectation that underlying inflation is moving towards its goal of steady 2%.
He also said that the recent rise in rice prices would probably maintain upward pressures on consumer prices. “There seems to be a change in Boj’s attitude that it is considering adjusting the degree of monetary relaxation and further raising interest rates,” but this may not happen faster than market consensus, “said Mizuho Securities economist Yusuke Matsuo.
The attention is now shifting to the comments of Governor Kazuo Ueda at a press conference later today for any evidence of how soon Boj will make her next move, says WSJ, with special attention to his assessment of the impact of President Trump’s economic policies.
Boj said in its statement that there is still a great deal of uncertainty about Japan’s economic prospects, including trade policies and economies abroad. Credit agricole Takuji Aida economist said the fact that Boj reported concerns about commercial friction may mean that it will tighten monetary policy at a slower pace than markets await. Aida foresees the next Boj interest rates in January 2026.
Economists say Trump’s duties could hurt Japan’s economic recovery by affecting the demand for exports and making Japanese companies cautious about spending. Cars’ duties would have a particularly significant impact on the economy, as Japan’s automotive industry affects a wide range of other sectors ranging from steel to IT equipment.
If Japanese car missions to the US are reduced by 40% based on a 25% duty on the cars set by the Trump government, it could reduce Japan exports and production by 1.8 trillion. Yen annually, equivalent to $ 12.06 billion, estimates Mizuho Research & Technologies. This could press the nominal gross domestic product by 0.33%, calculates.