The Bank of Japan kept its benchmark interest rate unchanged amid widespread market expectations that Governor Kazuo Ueda wouldn’t raise rates given the uncertainty stemming from US tariffs.

Donald Trump’s quixotic trade war appears to have entered the tilting-at-windmills phase as the U.S. president sees “big, beautiful” deals that just don’t seem to be there.

The Bank of Japan has slashed its economic growth forecasts for 2025 and 2026, blaming “extremely high uncertainties” over trade, in a move that raises doubts about future interest rate rises. Japan’s central bank released a quarterly update to its forecasts alongside a unanimous decision by its policy board to keep the overnight call rate at “around 0.