Bank of Japan Maintains Rate at 1% but Warns of Hawkish Shift

The Bank of Japan has maintained its policy interest rate at 1% after a majority vote by its monetary policy meeting. This decision was met with a hawkish tone from Governor Kazuo Ueda, who emphasized the need to pay closer attention to upside risks to prices due to the current inflation trend being very close to the bank's 2% price stability target.

At the post-decision press conference, Governor Ueda stated that many board members have relatively high inflation forecasts and believe the risks are tilted to the upside. He also mentioned that he intends to take this into account when chairing future policy meetings.

The bank's governor highlighted several key factors behind inflation risks, including exchange rate fluctuations, which may have a larger impact on inflation than in the past. With underlying inflation approaching 2%, Ueda warned of substantial damage if such inflationary risks materialize.