The Bank of Japan will almost certainly leave its policy unchanged next week on 1st May simply because there are too many uncertainties, especially relating to the US tariff policies. We expect Governor Ueda to maximize his flexibility, without abandoning the overall rate normalization policy plan. Economic data and political climate justify an early BoJ rate hike, but significant uncertainty is hindering it. At a meeting between Minister of Finance Katsunobu Kato and US Treasury Secretary Scott Bessent on 24th April, the US side did not call on Japan to take action on the exchange rate, as had been feared. Hence the risk that Japan will come under pressure to hike interest rates with an eye to the exchange rate rather than inflation (namely, in order to cause the yen to appreciate) has diminished. We still expect the BOJ to maintain its stance of continuing to hike rates to adjust the degree of monetary easing. We expect the next hike in the 31st July BOJ meeting. We also maintain our forecast that rates will be raised every six months thereafter, reaching 1.25% in July 2026. In his post-meeting press conference, it will be interesting to see how BOJ Governor Kazuo Ueda strikes a balance between this kind of policy stance and the downside risks to the economy in the wake of the Trump tariffs. On JPY we believe the short term range is 138-145 till we get further clarity on US tariffs as well as any material weakness in US employment nos.