Japan's economy grew much faster than expected in the second quarter as export volumes held up well against new U.S. tariffs, giving the central bank some of the conditions it needs to resume interest rate hikes this year, Reuters reported. Gross domestic product (GDP) rose 1.0% on an annualised basis, government data showed on Friday, marking the fifth straight quarter of expansion after the previous quarter's contraction was revised to growth. However, analysts warn global economic uncertainties fuelled by U.S.

Japan's government on Friday brushed aside rare and explicit comments from U.S. Treasury Secretary Scott Bessent who said the Bank of Japan was "behind the curve" on policy, which appeared to be aimed at pressuring the country's central bank into raising interest rates, Reuters reported. However, some analysts saw Bessent's comments, coupled with unexpectedly solid domestic growth data, as heightening the chance of a near-term rate hike by the BOJ - a view that pushed up Japanese government bond (JGB) yields and the yen on Friday. "It's a sign from the U.S.

Pressure is mounting within the Bank of Japan to ditch a vaguely defined gauge of inflation as worries about second-round price effects prompt some board members to call for a more hawkish communication of policy and a clearer path to future rate hikes, Reuters reported. BOJ Governor Kazuo Ueda has justified going slow on rate hikes by explaining that "underlying inflation," which focuses on the strength of domestic demand and wages, remains short of the central bank's 2% target.

Japan's annual wholesale inflation slowed for the fourth straight month in July, data showed on Wednesday, underscoring the central bank's view that upward price pressure from raw material costs will dissipate, Reuters reproted. But the wholesale prices of food and agriculture goods continued to rise in a sign of broadening price pressure that will likely keep alive market expectations of an interest rate hike by the Bank of Japan (BOJ).

Former International Monetary Fund Chief Economist Maurice Obstfeld has advised Japan to strengthen its cooperation with Asian and European countries, given disruptions to the global economic and financial order caused by U.S. policies, the Japan Times reported. In a recent interview with Jiji Press, Obstfeld expressed concern that U.S. President Donald Trump's administration has taken policy measures, including high tariffs and tax laws, that expand the federal debt and unpredictability, thereby undermining confidence in the dollar.

The US is working to finalize an announcement that would end the stacking of universal tariffs on Japanese goods, a senior Trump administration official said Friday, Bloomberg News reported. The plans, detailed on the condition of anonymity, would resolve prolonged confusion over how US President Donald Trump intended to impose levies on a key trading partner after striking a deal, and match public comments made by Ryosei Akazawa, Tokyo’s top trade negotiator, after a meeting on Thursday with his counterparts in Washington.

Japanese Prime Minister Shigeru Ishiba said on Monday he will not hesitate to hold talks with President Donald Trump to ensure an agreed cut to U.S. automobile tariffs is implemented soon, Reuters reported. In a parliament session on Monday, Ishiba drew criticism from some opposition lawmakers for not having signed an official document with the U.S. in clinching a trade deal last month. "Creating a document could have delayed the timing of tariff cuts. That was our biggest fear," Ishiba said, defending Japan's decision to agree on a deal without creating an official document with the U.S.

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.