Amid rising global uncertainty due to U.S. tariffs, the market widely anticipates that the Bank of Japan (BOJ) will signal a pause in its policy normalization efforts. However, the BOJ is expected to maintain its stance on gradual interest rate hikes when economic conditions become clearer.
A survey of 54 economists predicts that the policy committee, led by Governor Kazuo Ueda, will keep the benchmark interest rate unchanged at 0.5% after their two-day meeting concludes. Observers will closely examine the quarterly economic forecasts for any indications regarding the extent of the pause.
Following three rate hikes since March last year, the BOJ now faces the threat posed by Donald Trump's tariff policies to Japan's economy. Insiders have indicated that there is currently little need to alter the gradual rate hike stance. They also believe that progress toward achieving a sustainable 2% inflation target might be delayed.
According to Totan Research's chief economist, Izuru Kato, unlike other central banks, the BOJ is still in the early stages of normalization and is not expected to declare the end of this rate hike cycle.
Analysts will focus on the quarterly outlook report released alongside the policy statement, given the likely unchanged interest rates.
