The Bank of Japan (BOJ) is expected to lower its economic growth forecast at its April 30–May 1 policy meeting, as U.S. tariffs introduced by President Trump increase risks to Japan’s fragile, export-driven recovery, according to three sources.
The central bank is unlikely to raise interest rates from the current 0.5%, given ongoing market volatility linked to shifting U.S. trade policy.
In its May 1 quarterly outlook, the BOJ is likely to revise down its 2025 growth projection, previously set at 1.1% in January. The extent of the impact depends on whether Japan secures tariff exemptions in upcoming bilateral talks with the U.S.
Officials are still assessing whether the tariffs could derail Japan’s moderate recovery and progress toward the 2% inflation target. Most within the BOJ believe the tariffs may delay, but not stop, inflation momentum.
BOJ Governor Kazuo Ueda recently reaffirmed plans to raise rates at a measured pace but acknowledged that Trump's trade policies might force the BOJ to reconsider its approach.