Bank of Japan set to keep rates steady as Iran war clouds outlook

The Bank of Japan is widely expected to hold off raising interest rates on Tuesday, but drop hawkish signals to leave itself scope to push up borrowing costs in coming months to counter inflationary pressure from the Middle East conflict. The U.S.-Israeli war with Iran has complicated the BOJ's efforts to raise still-low interest rates gradually to levels deemed neutral to the economy, seen by markets at around 1.5 per cent. Markets are focusing on the BOJ's quarterly outlook report and comments from Governor Kazuo Ueda for clues on how the protracted Iran war affects its rate-hike path. At a two-day meeting ending ...