Insiders: Bank of Japan may soften its pessimistic view on US tariffs in quarterly report.

Three sources familiar with the Bank of Japan's thinking said the central bank will warn of the uncertainty surrounding the impact of U.S. tariffs in the quarterly report to be released this month, but may not present a pessimistic view of the short-term impact on the Japanese economy as it did three months ago. With the Bank of Japan expected to keep interest rates unchanged at 0.5% at the meeting on July 30-31, the market is watching how the central bank will describe economic growth and price outlook in the quarterly report to be released after the meeting. They are looking for clues on the timing of the next rate hike. One source said, "Although the impact of tariffs may worsen, it has not shown much in the data so far," which may influence the tone of the upcoming report from the Bank of Japan. Another source said, "The Bank of Japan must remain highly vigilant about tariff risks, but should not be too pessimistic."