The Bank of Japan's interest rate hike path faces obstacles, and U.S. tariff policy remains the biggest hindrance.

According to a summary of the opinions from the policy meeting of the Bank of Japan from April 30th to May 1st, the decision-making members of the bank hinted at further interest rate hikes while also emphasizing the need to remain vigilant about the potential economic impact of American tariff measures. The meeting minutes released on Tuesday (without disclosing the identity of specific speakers) showed that one of the nine policy committee members stated, "Given that real interest rates are low and the inflation target is expected to be achieved, the Bank's stance on continuing to raise policy rates has not changed." At the time of the release of this written record, global financial market risk appetite is rebounding as tensions between the US and China ease, making it clear that the Bank of Japan intends to raise borrowing costs after trade uncertainty has calmed to a certain extent. One member pointed out, "The final outcome of US tariff policies and how companies will respond are uncertain. Therefore, the Bank's current outlook on economic activity and prices can only be temporary and may undergo significant revisions as the situation develops." Global markets welcomed the unexpected significant reduction in US-China tariffs. The Japanese stock market rose, and the strength of the US dollar pushed the yen exchange rate to its lowest level since early April. At the recent meeting, the Bank of Japan postponed the time frame for achieving stable inflation targets by a year and halved the economic growth forecast for the fiscal year 2025. After the release of these dovish signals, including predictions from most Bank of Japan observers such as Goldman Sachs and Barclays, the next rate hike is expected to be delayed until later this year or 2026. The meeting summary on Tuesday and the latest developments in tariffs may prompt some analysts to anticipate rate hikes earlier. Japan's overall inflation rate has been above the Bank's target for three consecutive years, and the Bank's assessment suggests that the economic and price trends so far align with its outlook. One member stated, "Although the Bank of Japan will enter a period of pausing interest rate hikes as the US economy slows down, we should not be overly pessimistic and should implement monetary policy with a more flexible and agile approach."