USD/JPY Gains 1.10% on BOJ Forecasts

BOJ lowers GDP forecasts and sees significant uncertainty tied to Trump’s trade policy 🔎

The Bank of Japan left the short-term interest rate unchanged at +0.50% during its May 1 meeting but presented clearly more cautious forecasts. In the new quarterly report, the board lowered its real GDP forecast for fiscal year 2025 to 0.5% (from 1.1%) and for 2026 to 0.7% (from 1.0%), pointing to the burden from recently announced U.S. tariffs and their impact on corporate profits and global demand.

Inflation is still expected to hover around the 2% target in the medium term, but the previously projected inflation path has been pushed back by about a year:

• core CPI (all items excluding fresh food) is expected to be 2.0–2.5% in fiscal 2025, decline to 1.5–2.0% in 2026, and then return “around 2%” in 2027.

The Bank warned that both growth and price risks are “tilted to the downside” through the end of 2026 and emphasized that the recent rise in import and food costs will ease as weaker activity limits core inflation.

Ueda’s press conference

• “Uncertainty stemming from trade policies has risen sharply; projections could ‘change significantly’ if tariff negotiations shift.”
• The BOJ will continue raising rates if the economy and prices evolve as expected, but the forecast horizon is “highly data-dependent” and may be “strongly influenced” by tariffs.
• A delay in reaching the 2% target “does not mean a delay in hikes”; chronic labor shortages still support a “virtuous cycle” of wages and prices.

Governor Kazuo Ueda, speaking after the decision, stressed that “uncertainty stemming from trade policies has risen significantly” and that the timing of the next potential rate hike is strongly dependent on U.S. trade policy. He noted that the delay in achieving the 2% target does not mean rate hikes are off the table, pointing to chronic labor shortages that should keep wage — and ultimately price — pressures on an upward path. Ueda also announced a mid-term review of JGB purchase operations.

USDJPY (D1 interval)

Markets interpreted the combination of softer forecasts and a less hawkish tone as dovish. USDJPY is up 1.20% today to 144.50, approaching a key resistance zone around 144.00–145.00 JPY per USD.

Source: xStation 5

The material on this page does not constitute financial advice and does not take into account your level of understanding, investment objectives, financial situation or any other specific needs. All information provided, including opinions, market research, mathematical results and technical analyzes published on the Website or transmitted To you by other means, it is provided for information purposes only and should in no way be construed as an offer or solicitation for a transaction in any financial instrument, nor should the information provided be construed as advice of a legal or financial nature on which any investment decisions you make should be based exclusively To your level of understanding, investment objectives, financial situation, or other specific needs, any decision to act on the information published on the Website or sent to you by other means is entirely at your own risk if you In doubt or unsure about your understanding of a particular product, instrument, service or transaction, you should seek professional or legal advice before trading. Investing in CFDs carries a high level of risk, as they are leveraged products and have small movements Often the market can result in much larger movements in the value of your investment, and this can work against you or in your favor. Please ensure you fully understand the risks involved, taking into account investments objectives and level of experience, before trading and, if necessary, seek independent advice.

Today Markets