BOJ Stands Pat on Rates Amid Hawkish Signals and Yen Intervention

The Bank of Japan (BOJ) is set to keep interest rates steady at one percent on Friday, but signal its resolve to push up borrowing costs. This decision comes after the government intervened in the market to boost the weak yen.

Hawkish board member Hajime Takata may dissent and propose a hike to 1.25 percent, according to analysts. The BOJ meeting follows that of the US Federal Reserve on Wednesday, at which the board kept interest rates steady but with three dissenters calling for a quarter-percentage-point hike.

The BOJ's quarterly outlook report is expected to revise up its growth forecast for fiscal 2026 due to receding fears of a severe hit from the Middle East conflict. However, inflation forecasts may be revised lower due to subsidies and a drop in oil costs from levels seen in April.