The Bank of Japan expressed concerns about the potential impact of escalating trade tensions on the global economy. Despite this, the bank decided to maintain its key policy rate at 0.5%. The central bank acknowledged trade policies as a new risk factor in its outlook. The decision to keep rates steady was in line with expectations from economists. The yen weakened slightly against the dollar, while government bond futures declined and stocks fluctuated.

Although Japan's domestic economic indicators suggest a possibility of increasing interest rates, uncertainties in the international arena persist. The Bank of Japan hinted at the pace of rate hikes not needing to be too rapid. The bank's caution reflects a heightened sense of uncertainty since the previous meeting. The absence of mention of spring wage negotiations in the statement indicates alignment with the bank's perspective.

The Federal Reserve is anticipated to implement rate cuts later in the year, maintaining a wider rate differential with Japan. Japan saw positive wage negotiation outcomes, hinting at increased consumer spending. The country's inflation rate also accelerated to 4% in January, leading the G7 economies.