The Bank of Japan left policy settings unchanged Thursday but raised its price outlook, fueling expectations for an interest-rate increase as a trade agreement with the U.S. helped clear some uncertainties, the Wall Street Journal reported. The central bank held its policy rate steady at 0.5%, where it has remained since its last hike in January. It also raised its price projections and maintained its view that inflation will stay near its 2% target in the coming years.

Japan’s central bank policymakers are expected to keep rates on hold this week, even though a trade deal with the U.S. relieves some uncertainty over tariffs and strengthens the case for tighter policy in coming months, the Wall Street Journal reported. The Bank of Japan has been caught this year between the desire to raise rates amid persistent inflation at home and the need to keep borrowing costs low because of economic uncertainty stemming from U.S. tariffs.

President Trump’s trade agreement with Japan, announced this week, has intensified pressure on South Korea to cut a deal that doesn’t leave it at a disadvantage relative to its biggest rival in East Asia, the New York Times reported. Kim Jung-Kwan, South Korea’s industry minister, who arrived in Washington on Wednesday for negotiations, pledged an “all-out effort” to strike a deal by the Aug. 1 deadline to stave off a 25 percent tariff that the White House threatened in April and again this month. Moving forward, Mr.

The U.S. and Japan have reached a trade agreement, President Trump wrote in a social-media post Tuesday evening, saying he would set his so-called reciprocal tariffs at 15% for the country, the Wall Street Journal reported. Under the deal, Japan will invest $550 billion in the U.S., Trump said in his post on Truth Social. The U.S. will receive 90% of the profits from the investments, he added, without providing further details. Japan will also open to trade, Trump said, listing goods including cars and trucks, rice and other agricultural products.

Jolted by the threat of sweeping U.S. tariffs and “unfair” Chinese trade practices, the European Union and Japan on Wednesday launched a “competitiveness alliance” to expand bilateral trade ties, promote business cooperation and explore ways to diversify critical mineral supply chains, the Japan Times reported. The move comes as both sides have faced increased economic pressure from Washington. U.S. President Donald Trump said Tuesday that Washington had reached a new trade deal with Tokyo that leaves in place some tariffs, but the EU still faces a 30% levy with an Aug. 1 deadline.

A slight easing in Japan’s consumer inflation is welcome news for the central bank, but stubbornly high food prices will be of concern for policymakers whose hands remain tied by tariffs, the Wall Street Journal reported. Core consumer prices, which excludes volatile fresh food prices, rose 3.3% from a year earlier in June, government data showed Friday. That compared with May’s 3.7% rise, and matched the forecast in a poll of economists by data provider Quick.

Japan’s exports fell for a second straight month in June, fueling fears that U.S. tariffs will halt the nation’s economic recovery and complicate the central bank’s policy plans, the Wall Street Journal reported. Exports fell 0.5% compared with the same period a year earlier, according to the Ministry of Finance on Thursday. That was an improvement from May’s 1.7% drop but well short of an LSEG-compiled forecast for a 0.5% increase. Japan’s shipments to the U.S. slid 11.4% from a year earlier in June, highlighting the impact of higher tariffs.

President Donald Trump said on Wednesday the U.S. will probably "live by the letter" on tariffs with Japan and may have another trade deal coming up with India, following his announcement of an accord with Indonesia on Tuesday, Reuters reported. "We have some pretty good deals to announce," Trump told reporters at the start of a meeting with Bahrain's Crown Prince Salman bin Hamad Al Khalifa at the White House. He said he would also discuss trade issues with the Bahraini leader.