(MENAFN) The Bank of Japan (BoJ) announced on Thursday that it would maintain its policy interest rate at 0.5% for the fourth time in a row.

The decision was accompanied by a cautionary note, stating that "high uncertainties" still persist regarding the consequences of U.S. trade policies on both domestic and international economies and inflation, according to a news agency.

The move aligned with financial market forecasts, which anticipated no adjustment in the benchmark rate.

Since its previous gathering in June, where the central bank highlighted that the potential effects of U.S. tariffs were "extremely uncertain," the tone in its latest evaluation of the tariff environment has become more measured and less negative.

The BoJ acknowledged that the Japan-U.S. trade pact is considered one of the "positive developments" currently influencing its outlook.

"It is therefore necessary to pay due attention to the impact of these developments on financial and foreign exchange markets and on Japan's economic activity and prices," the institution stated in its official communication.

Although the BoJ kept its rate unchanged, it reiterated its readiness to raise interest rates further if there is a clear improvement in economic growth and inflation, though it remains cautious in its approach.

At the same time, as the cost of food continues to escalate, the bank revised its inflation outlook for the fiscal year starting in April.

Replacing its earlier estimate of a 2.2% rise, the BoJ now anticipates core consumer prices—which exclude the often erratic prices of fresh produce—to increase by 2.7%, largely driven by higher prices for rice and various other staple food items.

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