US-Japan Trade Deal May Pave Way for Bank of Japan Rate Hike, Sources Say

In Brief:

Japan’s trade deal with the US may open the door for the Bank of Japan (BOJ) to raise interest rates this year.

BOJ insiders say any hike still depends on how US tariffs impact Japan’s economy.

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Following the announcement of a major US-Japan trade agreement, insiders at the Bank of Japan suggest that the central bank may now have space to resume interest rate hikes—a move previously stalled by economic uncertainty tied to global trade tensions.

Sources close to BOJ deliberations told ChainCatcher that the central bank could soon issue a less pessimistic economic outlook, subtly signaling its readiness to shift policy. Still, a near-term hike is not guaranteed.

“As the clouds hanging over US trade policy dissipate, the BOJ may see room for a rate hike this year,” said one insider. Another cautioned that not all trade risks have cleared, and data in the coming months will be key to determining whether the Japanese economy can absorb the impact of US-imposed tariffs.

The agreement, announced by US President Donald Trump, includes provisions for $550 billion in Japanese investments into the US, alongside 15% tariffs on Japanese imports. In return, Japan will open its markets to more US goods, including automobiles and agriculture.

BOJ officials are expected to analyze economic trends through the summer before making a formal decision, with any policy shift likely to come in the fall of 2025.

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