Japan’s central bank policymakers are expected to keep rates on hold this week, despite the trade deal with the U.S. relieving some uncertainty over tariffs and strengthening the case for tighter policy.

The new U.S.-Japan trade deal lowers tariffs and strengthens economic ties, helping challenge China's regional aggression and instability.

Analysts at Bank of America said that the Japan deal "looks like a reasonable blueprint" for other auto-exporting countries like South Korea.

The US and EU are racing to lock in the final details of their major new trade deal before Friday's deadline. But critics say its a rushed fix, with German Chancellor Friedrich Merz calling the outcome unsatisfying,

President Donald Trump announced a trade agreement with Japan on Tuesday, making it the largest U.S. trade partner to broker an accord as the White House threatens to impose tariffs on dozens of countries within days.

White House Press Secretary Karoline Leavitt said, "Japan will now pay a 15% tariff versus the reciprocal rate of 24% that they initially had."

Japan will invest $550 billion in the U.S. and allow the U.S. to tax Japanese goods sold in America at 15 percent.

The U.S. is significantly reliant on the Taiwanese company for advanced chip manufacturing, raising concerns due to its proximity to China.

President Donald Trump announced new trade agreements with Japan, the Philippines and Indonesia this week as the Trump-imposed August 1 tariff deadline approaches. The U.S.–Japan agreement reduces planned tariffs on Japanese exports from 25% to 15% in exchange for a $550 billion Japanese investment in U.