The Bank of Japan kept its short‑term policy rate at 1.25%, delivered a hawkish tone and lifted its 2027 core CPI outlook.

The Bank of Japan left its short‑term policy rate unchanged at 1.25% after an 8‑1 vote, with board member Takata dissenting for a 1.5% hike. Governor Kazuo Ueda stressed the central bank will keep adjusting policy as needed and warned that the balance of risks has shifted toward the danger of inflation overshooting its 2% target.

Policy stance and inflation outlook

• Underlying inflation is now broadly in line with the 2% price‑stability goal
• Core CPI forecast for fiscal 2027 was raised to 2.6% from 2.4%
• Core CPI forecast for fiscal 2028 stays at 2.0%

Growth and financial conditions

• GDP growth forecasts lifted to 0.7% for fiscal 2026 and 0.7% for fiscal 2027
• Financial conditions remain accommodative and short‑term real rates stay low
• Corporate funding demand is rising while lenders stay willing to extend credit

What traders are watching next

• Further BoJ rate moves will depend on wage data, inflation trends and financial‑condition developments
• Middle‑East geopolitical risk and AI‑driven demand could affect market volatility
• Key currency pairs: USD/JPY around 157.00 and AUD/USD near 0.7035

Related news

• Fed officials signal need for more rate hikes
• ECB's Nagel says decisive action will be taken if inflation risks persist
• Evening market overview, Oct 30, 2026
• BoJ holds rates steady as gold slips below $4,000

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This article is compiled from international market news for information only. It is not investment advice.