BOJ Maintains Rates Steady, Signals Resolve for Further Hikes

The Bank of Japan (BOJ) is set to keep interest rates steady at its two-day meeting ending on July 31, but signal its resolve to continue pushing up borrowing costs. The move aims to tame price pressures from a weak yen and the Middle East conflict.

Analysts expect the BOJ to revise up its growth forecast for fiscal 2026 due to receding fears of a severe hit from the conflict, according to sources. However, they also predict a cut in inflation forecast due to subsidies and lower oil costs.

Hawkish board member Hajime Takata may dissent and propose a hike to 1.25%, some analysts say. The BOJ raised rates to a 31-year high in June and signaled its readiness to tighten further as it focuses on taming price pressures from the energy shock.