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BoJ Governor Ueda explains why July rate was held at 1.00%
Ueda said CPI inflation is likely to accelerate to clearly above 2% in the second half of FY 2026 before easing toward around 2% later in the projection period.
Bank of Japan Governor Kazuo Ueda said the central bank left its key interest rate unchanged at 1.00% at the July policy meeting, while laying out the inflation and growth path guiding policy, according to FXStreet.
Ueda told the press conference Japan’s economy is expected to keep growing moderately, with projected real GDP growth largely unchanged from the April outlook. He said the year-over-year rate of CPI inflation is likely to accelerate to clearly above 2% from the second half of FY 2026, then decline toward around 2% in the second half of the projection period.
The governor also emphasized the need to watch risks that could push inflation higher, including the impact of the Middle East situation on financial and FX markets and on Japan’s economy and prices. He highlighted concern about underlying CPI deviating upward above the BoJ’s 2% price stability target.
Ueda said the BoJ expects to keep raising rates, adjusting the degree of easing in response to the economy, prices, and financial conditions, and that it will consider the timing and pace of rate adjustment based on the likelihood and risks around the baseline outlook.
He added that the BoJ will focus on sustainably and stably achieving the price target near 2%, warning that risks of inflation overshooting beyond 2% are potentially too large to ignore.