Sources: US-Japan trade agreement clears obstacles for Bank of Japan to resume interest rate hikes

ChainCatcher news, sources say that the trade agreement reached between U.S. President Trump and Japan has opened up space for the Bank of Japan to raise interest rates again this year. The Bank of Japan may begin to convey this outlook by presenting a less pessimistic view of the economic outlook.

However, four sources familiar with the Bank of Japan's thinking said that a recent rate hike is far from certain, and the timing of any increase depends on whether the economy can withstand the impact of U.S. tariffs.

One source said, "As the clouds hanging over U.S. trade policy begin to clear, the Bank of Japan may see room for a rate hike this year." A second source added, "Not all trade-related uncertainties have been resolved," noting that the Bank of Japan must carefully analyze data before the autumn bottom to look for clues on how U.S. tariffs are affecting the economy.