The central bank lowered its economic growth forecast and core inflation forecast.

The Bank of Japan on Thursday kept interest rates unchanged and lowered its economic growth forecast, as uncertainty surrounding U.S. tariffs cast a shadow over the outlook for the world's fourth-largest economy. However, the Bank of Japan expects inflation levels to still roughly reach the 2% target in the coming years as planned, indicating that the risks from U.S. tariffs may only delay, rather than completely disrupt, its interest rate hike plans. The Bank of Japan lowered its economic growth forecasts for the fiscal years 2025 and 2026. It also lowered its core inflation expectations, but still expects inflation to remain around 2% in the fiscal year ending March 2028. The Bank of Japan stated that if economic and price forecasts are realized, we will continue with interest rate hikes. However, it also pointed out that given the extreme uncertainty surrounding the future trade and other policy directions in various countries, we will closely monitor economic and price trends, flexibly and cautiously guide monetary policy, and not have a preset stance.