BOJ Gov. Kazuo Ueda, pictured here in March, said last week that the Iran war could fuel inflation while also potentially being a drag on growth. | JIJI

The Bank of Japan heads into its two-day policy meeting next week with the prospects for a rate increase dimming as economic uncertainties remain high due in part to the conflict in the Middle East.

“We expect that the BOJ will keep the policy rate steady,” UBS Securities economists Go Kurihara and Masamichi Adachi wrote in a report on Wednesday. 

“Previously, we projected a rate hike in April, but as market expectations significantly faded, we have revised our projection.” 

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