BOJ Keeps Rates Unchanged, Cuts Fiscal 2026 Inflation Forecast

The Bank of Japan (BOJ) held its benchmark interest rate steady at 1.0 percent, despite concerns about mounting inflation risks. In a closely watched decision, the BOJ's board members voted 8-1 to maintain the uncollateralized overnight call rate at 1.0 percent.

The central bank emphasized its readiness to continue pushing up borrowing costs if necessary to forestall inflation risks. Since exiting negative interest rates in March 2024, the BOJ has raised rates a total of five times.

In its quarterly report on economic and price developments, the BOJ revised its inflation forecast downward for fiscal 2026, expecting core inflation to reach 2.5 percent, down from an earlier estimate of 2.8 percent in April.