BOJ to Hold Fire on Interest Rate Hike Amid Economic Optimism

The Bank of Japan is set to convene its two-day policy meeting on Thursday, where it will likely consider keeping its key interest rate steady at around 1 percent. The last policy change occurred in June when the bank raised the rate by a quarter percentage point.

Experts believe that the BOJ will hold off on raising the rate again to gauge how the previous increase has affected households and businesses. This cautious approach is aimed at assessing the impact of the rate hike on the economy before making further adjustments.

The bank's policymakers also plan to compile their latest economic outlook, which suggests that Japan's growth rate for fiscal 2026 may be higher than previously forecasted due to strong demand in AI-related sectors and reduced risk from disruptions in crude oil supply stemming from the Middle East situation.