The Bank of Japan, Japan's Central Bank, on the 1st froze the benchmark interest rate at around '0.5%' for the second consecutive time, in line with market expectations.
According to Kyodo News and Asahi Shimbun, the Bank of Japan decided to maintain the short-term policy interest rate (benchmark interest rate) at a meeting on financial policy decisions held for two days until this day. Previously, the Bank of Japan raised the short-term policy interest rate from around '0.25%' to around '0.5%' in January and froze the rate in March.
According to NHK, the Bank of Japan reportedly concluded that the economic and inflation outlook has become uncertain due to the tariffs policy of the Donald Trump administration and must be carefully monitored. The Bank of Japan believes that trade conflicts triggered by U.S. tariff policies will hinder global economic growth and hurt the revenue of Japanese corporations.
However, the Bank of Japan also maintained its existing stance that it would gradually push for an increase in the benchmark interest rate if prices rise steadily, Asahi reported.
The Bank of Japan also released its 'Economic and Price Situation Outlook' report, issued every three months, on this day. The Bank of Japan revised its economic growth outlook for the fiscal year 2025 (April 2025 to March 2026) down by 0.6 percentage points to 0.5%, and the GDP growth outlook for the fiscal year 2026 (April 2026 to March 2027) was also lowered by 0.3 percentage points to 0.7%.
The projected consumer price inflation rate is estimated at 2.2% for the fiscal year 2025 and 1.7% for the fiscal year 2026. These rates decreased by 0.2 percentage points and 0.3 percentage points, respectively, compared to previous forecasts. The Nihon Keizai Shimbun noted, 'This appears to reflect the economic growth slowdown impact due to the tariffs policy of the Trump administration.'