Taken together, the comments indicate Ueda intends to keep his options open on policy so he can respond with a hike if the impact of tariffs proves to be manageable.

TOKYO—The Bank of Japan halved its growth forecast for the Japanese economy as U.S. tariffs begin to bite, highlighting how President Trump’s efforts to rewire U.S. trade are hitting economies around the world.

The Bank of Japan lowered its growth forecast by more than half and paused its efforts to raise interest rates.