Bank of Japan reduces growth forecast due to tariffs but maintains interest – observer

The Central Bank of Japan cut off on Thursday to half the forecast for the country’s economy growth for the 2025 fiscal year, due to the impact of the trade war launched by the United States.

In the quarterly report on economic perspectives, Banco do Japan (Boj) reduced expectations for the expansion of Gross Domestic Product (GDP), compared to the previous estimate, published in January, which provided for a growth of 1.1%.

Also this Thursday, the Central Bank decided to keep interest rates unchanged, in the midst of global economic uncertainty generated by the new US tariff policy.

At the end of a two -day meeting, the institution chose to maintain the reference rate at 0.5%, after being last increased it in January.

The Boj Monetary Policy Committee unanimously decided to maintain the strategy and stated that “the Japanese economy recovered moderately, although it has some weaknesses,” according to the statement adopted at the end of its meeting.

The decision is in line with the expectations of most analysts, who did not foresee new interest increases in the fourth largest economy in the world after three climbs within 10 months.

To counteract the return of inflation in Japan after two and a half years, Boj began to tighten the rates in March 2024, after ten years of ultra-component monetary policy at which rates remained virtually zero.

Consumer prices in Japan, excluding fresh products, increased 3.2% in March, in annual terms, far above the goal of 2%, in the context of rising food and energy prices.