Bank of Japan holds interest rates, flags trade uncertainties

THE Bank of Japan kept its main interest rate unchanged yesterday, hiking its inflation and growth forecasts while also flagging “high uncertainties” from US President Donald Trump’s trade policies.

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Maintaining its main rate at 0.5%, as expected, the BoJ hiked its projection for inflation excluding fresh food this year to 2.8% from 2.3% previously.

It also raised its growth projection this year to 0.6% from 0.5%.

In a statement it said growth was “likely to moderate as trade and other policies in each jurisdiction lead to a slowdown in overseas economies and to a decline in domestic corporate profits and other factors”.

But it added that “factors such as accommodative financial conditions are expected to provide support”.

“Thereafter, Japan’s economic growth rate is likely to rise, with overseas economies returning to a moderate growth path,” it said.

The bank welcomed “positive developments” in global trade, pointing to Trump’s recent agreement with Japan announced last week.