Capital Economics: Tariff uncertainty may delay the Bank of Japan's rate hike until 2026

ChainCatcher news, Capital Economics stated that the tariff issue continues to lack clarity, which may delay the Bank of Japan's actions to tighten monetary policy. The agency's baseline forecast remains that Tokyo will reach an agreement with Washington to avoid the 25% tariff threat. If this happens soon, and tariffs are not raised or only moderately raised, then the rationale for the Bank of Japan to raise interest rates in October will not be shaken.

The current inflation rate is far above the Bank of Japan's forecast from May, and the Japanese economy has performed relatively well so far. However, economist Marcel Thieliant stated that any further delays in negotiations or a significant increase in tariffs could persuade the central bank to postpone interest rate hikes until next year.