emirates7 - On Thursday, the Bank of Japan (BOJ) lowered its economic growth and inflation forecasts for the current fiscal year beginning in April, while keeping its key interest rate steady amid rising concerns over the economic impact of substantial U.S. tariffs.

The central bank cautioned that growing trade tensions could slow down global economies, which in turn may reduce domestic corporate profits. It also downgraded its projections for both economic growth and inflation for fiscal 2026.

In its latest quarterly outlook, the BOJ now expects Japan’s economy to grow by just 0.5 percent this fiscal year, down from its previous estimate of 1.1 percent.

For fiscal 2025, core consumer prices are forecast to rise by 2.2 percent, slightly below the 2.4 percent projection made in January.

“There is considerable uncertainty over how trade and other policy developments in various regions will unfold, and how global economic activity and prices will respond,” the BOJ stated, as it held the short-term interest rate at approximately 0.5 percent for the second straight meeting, in line with expectations.

While continuing to aim for a stable 2 percent inflation rate, the BOJ now expects inflation to fluctuate between 1.5 and 2.5 percent through fiscal 2025 to 2027.