The Bank of Japan (BOJ) kept its uncollateralized overnight call rate around 1.25% on Oct. 30, as a higher inflation outlook and yen-related price pressures shaped expectations for its next policy move.
The decision passed 8-1. Board member Hajime Takata dissented and proposed raising the rate to 1.5%.
The BOJ’s October outlook said inflation in the consumer price index, excluding fresh food, is likely to move clearly beyond 2%. It raised its median fiscal 2027 estimate to 2.6%, from 2.4% in July. Earlier coverage of the October inflation forecast reported the revised projection.
The outlook linked price pressure to firms’ labor costs, oil and semiconductor expenses, AI-related demand and yen weakness. It described underlying inflation as generally consistent with the BOJ’s 2% goal, while risks to consumer prices leaned upward.
TD Securities senior rates strategist Prashant Newnaha expects the BOJ to raise rates roughly every three months, with the next increase in December, FXStreet reported. The outlet also reported his 2.25% terminal-rate forecast and said weaker AI spending could put that projection at risk.
The BOJ said a weaker yen can make imported goods more expensive for households and squeeze smaller companies’ earnings, while some internationally active firms may benefit. The bank has not set a date for its next rate increase; its outlook says future adjustments will depend on economic activity, prices, financial conditions and risks. The BOJ’s calendar lists its next policy meeting for Dec. 17-18.
