BOJ Tackles Economic Challenges Amid Global Uncertainties

The Bank of Japan chose to keep interest rates unchanged on Tuesday, opting for a measured approach in reducing its balance sheet next year. This decision reflects the central bank's careful navigation through a landscape marked by Middle East tensions and U.S. tariffs, complicating efforts to normalize monetary policy.

BOJ Governor Kazuo Ueda noted the impact of rising oil prices on inflation, though he emphasized larger risks stemming from U.S. trade policies. The central bank remains cautious about increasing rates amid economic uncertainties. He stressed the need for more economic data before deciding on future rate hikes.

In its widely anticipated decision, the BOJ unanimously voted to maintain short-term interest rates at 0.5% and will continue tapering government bond purchases. This cautious approach aims to minimize market disruptions, with an interim review scheduled for June next year to assess the tapering program's progress.

(With inputs from agencies.)