BOJ Keeps Interest Rate Unchanged Amid Middle East Tensions

The Bank of Japan (BOJ) kept its key interest rate unchanged at around 1.0 percent on July 31, 2026, after raising it to a 31-year-high last month. The decision was made despite ongoing Middle East tensions.

In the latest quarterly economic outlook report, the BOJ revised upwards its economic growth forecast for fiscal year 2026 from 0.5 percent to 0.6 percent. For fiscal year 2027, the central bank lifted its outlook to an expansion of 0.8 percent compared to 0.7 percent earlier.

Core consumer prices, excluding volatile fresh food, are estimated to rise 2.5 percent in fiscal 2026, against the 2.8 percent forecast in April. The BOJ also warned that there is a risk that underlying CPI inflation will deviate upward to a level above its 2 percent price stability target.