BOJ Expected to Hold Rates Steady Amid Inflation Expectations Rise

The Bank of Japan is poised to maintain its benchmark interest rate at 1% during its upcoming policy meeting on July 30-31, according to reports from Nikkei. This decision follows a key rate hike in June by 25 basis points to a 31-year high.

Despite the anticipated pause, economists expect the central bank to boost its real GDP growth forecast for fiscal 2026 to around 0.8%, up from 0.5% in April. This increase is attributed to rising demand for artificial intelligence and resilient business sentiment.

However, core inflation projections for fiscal 2026 are likely to be adjusted downward due to energy subsidies, while long-term price outlooks remain anchored near the 2% target.