Bank of Japan left its policy rate unchanged at around 0.75% as widely expected, and maintained a clear tightening bias, signaling that further rate hikes remain on the table. The decision was passed by an 8–1 vote, with Hajime Takata dissenting in favor of an immediate hike to 1%.
The statement emphasized that “if the outlook for economic activity and prices… will be realized, the Bank… will continue to raise the policy interest rate,” reinforcing that the direction of policy remains upward. While near-term inflation is expected to dip below 2% due to fading food price effects and government measures, BoJ made clear it views this as temporary rather than a shift in underlying dynamics.
Looking ahead, policymakers expect inflation to come under renewed upward pressure, driven in part by rising crude oil prices and a sustained wage-price cycle. With labor shortages likely to intensify and inflation expectations gradually rising, BoJ appears comfortable continuing its gradual tightening path, even as it monitors global risks, including Middle East tensions and their impact on energy markets.
