The Bank of Japan struck a cautious note Thursday, slashing growth forecasts, expressing pessimism about achieving its inflation target and holding rates unchanged, as U.S. tariffs fueled uncertainty and left the monetary authority scrambling to update their spreadsheets.
“I think it shows how cautious the bank is about the downside risks to both domestic and international economic outlooks,” said Shinichiro Kobayashi, chief economist at Mitsubishi UFJ Research and Consulting, adding that the downward revision in the growth forecast was surprisingly dramatic in scale.
At a two-day policy meeting that concluded Thursday, the central bank left rates unchanged in line with expectations, as it continues to gauge the effects of tariffs put in place by U.S. President Donald Trump. Its policy board made no adjustment to the short-term policy rate, currently 0.5%.
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