In brief
After raising its benchmark rate to a 31‑year high of 1.25 % in September, the Bank of Japan (BOJ) left the rate unchanged this month. It said underlying inflation has broadly reached its 2 % target and will carefully monitor price pressures, potentially tightening policy again. The BOJ also updated its fiscal‑2027 outlook, raising the core CPI forecast to 2.6 % and lowering GDP growth to 0.7 %.
Tokyo – The Bank of Japan (BOJ) left its key benchmark rate unchanged at about 1.25 % after its policy meeting on Friday, while saying underlying inflation has generally reached the 2 % target it set in 2013.
Xinhua reported that this decision follows a 0.25‑percentage‑point hike in September that brought the rate to a 31‑year high. The agency noted that the BOJ will closely monitor external price pressures, including crude oil, semiconductors and yen depreciation, and may raise rates again to anchor inflation.
Japan Today echoed that the central bank said underlying inflation has "generally" met its 2 % goal, marking nearly 14 years since the target was established. The outlet added that the BOJ will keep a watchful eye on global developments such as Middle‑East price shocks and artificial‑intelligence‑driven demand.
Mainichi also reported the BOJ’s announcement, highlighting that the Bank said it will sharpen policy focus on keeping underlying inflation firmly around 2 %. It reiterated the commitment to monitor price movements linked to foreign exchange and worldwide supply dynamics.
In its quarterly economic outlook, the BOJ noted that with the rate now higher than previously, it is important to examine how financial conditions change under such circumstances. It raised its core consumer‑price inflation forecast for fiscal 2027 to 2.6 % from 2.4 %, while lowering the real GDP growth projection to 0.7 % from 0.8 %.
"Our monetary policy will increasingly focus on keeping underlying inflation firmly anchored around 2 %," said BOJ Governor Kazuo Ueda at a post‑meeting press conference.
The central bank said the inflationary rise is being driven largely by external factors: higher energy prices, the cost of semiconductors, and a weaker yen. It also cited the Middle‑East, global demand related to artificial intelligence, and foreign‑exchange movements as influential on Japan’s economic activity and prices.
Looking ahead, the BOJ scheduled its next policy meeting for December 17‑18, when markets are increasingly expecting another rate hike if price pressures persist.
The BOJ’s updated outlook underscores a shift in expectations for fiscal 2027, with a higher core inflation forecast and a more modest GDP growth projection, reflecting the Bank’s assessment of the evolving macro‑environment.
Overall, the BOJ’s unchanged rate and emphasis on monitoring highlight a cautious stance as it balances recent inflation gains against potential future volatility.
