Overview

• Deputy Governor Shinichi Uchida warned that extreme uncertainty over US tariffs skews risks to the downside for Japan’s economic activity and prices.
• The remarks followed President Trump’s announcement of a trade deal requiring $550 billion in Japanese investment and a 15% tariff on imports from Japan.
• A Reuters poll found 83% of economists expect no change to the BOJ’s 0.5% rate at its July and September meetings, while 54% foresee at least a 25 basis-point increase by year-end.
• Uchida noted that widespread food-cost rises signal a lasting shift in firms’ price-setting behaviour and have pushed core inflation toward the 2% target.
• Economists predict core consumer inflation will peak at 2.6% in the year ending March 2026 before decelerating to 1.7% in the following fiscal year.