---
title: "The Bank of Japan maintains its stance on interest rate hikes but hints at pausing actions to address the risks of U.S. tariffs"
description: "Bank of Japan Governor Kazuo Ueda hinted that interest rate hikes may be paused due to the risks of U.S. tariffs. Although Japan's underlying inflation is gradually accelerating and the economic condi"
type: "news"
locale: "en"
url: "https://longbridge.com/en/news/235182342.md"
published_at: "2025-04-09T09:05:00.000Z"
---

# The Bank of Japan maintains its stance on interest rate hikes but hints at pausing actions to address the risks of U.S. tariffs

> Bank of Japan Governor Kazuo Ueda hinted that interest rate hikes may be paused due to the risks of U.S. tariffs. Although Japan's underlying inflation is gradually accelerating and the economic conditions are generally in line with expectations, attention must be paid to the uncertainties brought about by trade policies. The central bank is expected to maintain the interest rate at 0.5% during the meeting from April 30 to May 1 and release new quarterly economic forecasts. Most economists believe that Trump's tariffs will impact Japan's economic growth and predict that the Bank of Japan will raise interest rates again in the second half of the year

According to the Zhitong Finance APP, Bank of Japan Governor Kazuo Ueda stated that the central bank must assess whether the economic trends meet expectations "without preconceived notions," suggesting a possible pause in interest rate hikes amid the impact of U.S. tariffs on the market.

Ueda said on Wednesday that although inflation remains below the central bank's 2% target, Japan's underlying inflation is gradually accelerating as wages continue to rise, and the economic and price conditions are generally in line with expectations. "However, we need to pay close attention to risks, especially the rising uncertainty brought about by recent trade policy developments in various countries," he emphasized in his speech, indicating the Bank of Japan's vigilance regarding the potential impact of U.S. tariffs.

The central bank governor reiterated that if the economy continues to improve and aligns with current forecasts, the Bank of Japan will continue to raise interest rates. "But we must assess whether the forecasts can be achieved without preconceived notions at each policy meeting," this statement implies that the central bank may remain cautious until the effects of U.S. tariffs become clearer.

This statement comes as the Bank of Japan is set to hold a policy meeting from April 30 to May 1, where it is expected to maintain the interest rate at 0.5% and release new quarterly economic and price forecasts. The new forecasts, which will extend for the first time to the fiscal year 2027, will reveal how the Bank of Japan weighs the threat of Trump tariffs to growth against the domestic inflation pressure from rising food prices.

After exiting its aggressive stimulus program last year, the Bank of Japan raised interest rates to 0.5% in January, believing that Japan is on track to achieve the 2% inflation target sustainably.

Ueda has repeatedly emphasized that interest rates will continue to rise to a level that is neither too cold nor too hot—analysts believe this to be around 1-1.5%. However, Trump's comprehensive tariffs on Japan and other countries complicate the Bank of Japan's plans to continue raising rates from low levels.

A survey conducted by the Japan Center for Economic Research on Wednesday showed that most economists expect Trump's tariffs to reduce Japan's economic growth by 0.6 percentage points in the fiscal year ending in March 2026. The survey conducted from March 27 to April 3 also indicated that most economists predict the Bank of Japan will raise interest rates again in the second half of this year.

During a parliamentary defense, Ueda stated that the previous interest rate hike decision was based on the judgment that underlying inflation is gradually climbing toward 2%. He added that currently withdrawing excessive monetary support helps avoid the need for significant rate hikes in the future to combat excessively high inflation, ensuring sustainable economic growth.

When lawmakers called for a stronger commitment to address the impact of tariffs, Ueda only stated that U.S. trade policy remains uncertain. "We will assess the developments, analyze their impact on the economy, prices, and markets, form reliable forecasts, and adjust policies as necessary."

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> **Disclaimer**: This article is for reference only and does not constitute any investment advice.