BOJ Keeps Rates Unchanged, Cuts Inflation Forecast Amid Global Turbulence

The Bank of Japan (BOJ) has maintained its short-term rate target at 1.00%, following a widely anticipated decision. The vote was not unanimous, however, with one member, Takata, dissenting from the majority.

Takata argued that the BOJ needs to be more nimble in response to demand-driven upside price risks stemming from overseas developments and shifting global financial conditions. He noted that the situation has entered a new phase, requiring a more flexible monetary policy approach.

The BOJ's inflation forecasts have been revised downward for fiscal year 2026, with core CPI expected to grow by +2.5%, down from +2.8% in April. Underlying inflation is rising as firms increase wages and prices, nearing the 2% target.