BOJ Holds Rates, Signals Further Hikes as Yen Remains Under Pressure

The Bank of Japan maintained its key interest rate at 1% on Friday after a two-day policy meeting. This decision came despite government intervention to support the weakening Japanese yen, which has been under pressure from four-decade lows.

Board member Hajime Takata dissented with a proposal for a 25-basis-point increase to 1.25%, highlighting ongoing debate within the policy board over the pace of monetary tightening.

The BOJ upgraded its economic growth forecast for fiscal 2026, but lowered near-term inflation projections due to government subsidies and lower oil prices. However, it maintained that risks to prices remain skewed to the upside, with underlying inflation potentially exceeding its 2% target.