By Leika Kihara

TOKYO (Reuters) -The Bank of Japan is expected to keep interest rates steady next week and signal its cautious optimism the economy appears to be weathering the hit from U.S. tariffs, a message that may keep alive expectations of another hike in borrowing costs this year.

But Governor Kazuo Ueda is likely to warn of lingering uncertainty as tariffs work their way through the economy and, coupled with signs of weakness in the U.S. economy, cloud the outlook for Japan’s export-reliant economy.

The BOJ’s meeting will come days after that of the U.S. Federal Reserve, which looks set to kick off a series of interest rate cuts to shore up a fragile labour market.

At the two-day gathering ending on September 19, the BOJ is widely expected to keep interest rates steady at 0.5%.

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