Bank of Japan Holds Rate, Cuts Inflation Forecast Amid Economic Slowdown

The Bank of Japan has held its policy rate at 1% and reduced its forecast for core inflation in fiscal 2026 to 2.3%-2.7%, down from a previous projection of 2.8%-3%. This move was announced by the central bank on July 31, 2026.

The decision to maintain the policy rate at 1% is seen as a cautious approach by the Bank of Japan, which has been dealing with low inflation and a sluggish economy. The central bank's projection for core inflation in fiscal 2026 was lowered due to concerns about deflationary pressures.