The Bank of Japan kept its uncollateralized overnight call rate around 1.25% Friday while lifting fiscal 2027 inflation projections, signaling that further tightening will depend on economic, price and financial conditions and risks to its outlook.
The Policy Board voted 8-1 to hold the rate. Board member Hajime Takata dissented, proposing a level of about 1.5%.
For fiscal 2027, which runs from April 2027 through March 2028, the BOJ’s median forecast for consumer price index (CPI) inflation excluding fresh food rose to 2.6%, compared with 2.4% in its July outlook. Its estimate for CPI excluding both fresh food and energy increased to 2.7% from 2.6%.
The central bank assessed that underlying price growth was broadly compatible with its 2% target, while risks around the inflation outlook leaned higher. The BOJ established that target in January 2013. In September, it linked future rate adjustments to economic and financial developments, as EconoTimes previously reported.
The BOJ said higher energy and raw-material costs could squeeze company profits and household purchasing power. It identified crude oil prices, demand for semiconductors and other goods tied to artificial intelligence, a weaker yen, and businesses passing wage increases into prices as factors shaping inflation.
Separately, the BOJ will increase the annual pace of sales from its exchange-traded fund holdings to about ¥860 billion on a book-value basis, from about ¥330 billion, beginning in January 2027. The bank said the new pace would equal about 0.1% of market trading value.
The BOJ’s next scheduled policy meeting is Dec. 17-18, 2026. Its October outlook did not set a date or rate level for a future increase.
