The BOJ interest rate remained at 1.25% on October 30, 2026, as the Bank of Japan said underlying inflation was generally consistent with its 2% target for the first time since the target was adopted in 2013.

Key Takeaways

  • The decision to hold the policy rate, its highest level since 1995, passed by an 8–1 vote.
  • Board member Hajime Takata dissented, seeking an increase to 1.5%.
  • The bank raised its inflation forecasts for fiscal 2027 and flagged the risk of underlying inflation exceeding 2%.

BOJ interest rate decision and inflation target

The bank’s assessment marked a change from its previous description of underlying inflation as “approaching 2 percent.” The shift in language came even as the bank left its policy rate unchanged.

The Bank of Japan adopted its 2% price stability target in January 2013, defining it in terms of the year-on-year change in the consumer price index.

Fiscal 2027 inflation forecasts rise

The BOJ raised its fiscal 2027 inflation forecast to 2.6% from 2.4%. It also lifted its forecast for core-core inflation, which excludes fresh food and energy, to 2.7% from 2.6%.

The bank warned that underlying inflation could rise beyond 2%, citing a shift in firms’ behavior toward raising wages and prices, as well as other factors that could push prices higher.

Recent inflation and wage data

Japan’s core inflation reached 2.1% in September, its highest level in 2026. Inflation-adjusted wages rose 1.5% from a year earlier in August, marking an eighth consecutive monthly increase.

A weak yen and high energy prices have added to inflation pressures, while government energy subsidies have held down consumer price figures.

Read More News

More FinanceVelix news

Disclaimer

This FinanceVelix article provides general information, not personalized financial, investment, legal, or tax advice. Market prices, interest rates and economic conditions can change; investments carry a risk of loss. Facts reflect the material available when published and may change. Check important information independently and consult a qualified professional when needed. Mentioning an asset, company, or service is not an endorsement.