Forex
Home›Forex›Central Banks›Bank of Japan keeps its short-term rate at 1.00% after…
Bank of Japan keeps its short-term rate at 1.00% after review
The BoJ voted 8-1 to hold the rate, and a proposal to lift it to 1.25% was turned down, with officials citing risks including the Middle East conflict and overseas demand shocks.
The Bank of Japan left its short-term interest rate unadjusted at 1.00% after concluding a two-day monetary policy review meeting, according to FXStreet. The decision was made by an 8-1 vote.
BoJ board member Takata argued that conditions had shifted to a new phase and proposed raising the short-term rate target to 1.25%, but the majority rejected the plan. FXStreet said the BoJ expects financial conditions to remain accommodative, while monitoring upside risks to prices from overseas developments and changes in overseas financial conditions.
The BoJ statement also pointed to an underlying inflation trend approaching 2% and said it will continue raising rates in response to economic and price developments, weighing the timing and pace of hikes against baseline outcomes and risks. It added that it will pay particular attention to how the Middle East conflict could affect FX markets, the economy, and prices.
FXStreet further noted that the BoJ cited improvements in the output gap, which has been slightly positive, and projected moderate economic growth. It also listed forecast medians, including core CPI fiscal 2027 at 2.4%, core CPI fiscal 2028 at 2.0%, real GDP fiscal 2026 at 0.6%, and real GDP fiscal 2027 and fiscal 2028 at 0.8%.