BOJ keeps rates at 0.5%, signals possible hike by year-end
The Bank of Japan (BOJ) held its key interest rate at 0.5% on Thursday, as expected, but reaffirmed plans to raise borrowing costs if inflation and growth stay on track — keeping open the possibility of a December rate hike.
The yen weakened following the decision, while two board members dissented, calling for an immediate hike to 0.75%, News.Az reports, citing Reuters.
In its quarterly outlook, the BOJ raised its growth forecast for the fiscal year ending March 2026 and said it expects core inflation to reach 2% in the latter half of its three-year projection.
Governor Kazuo Ueda will hold a press briefing later Thursday to outline future policy guidance. Analysts say the central bank is “tip-toeing” toward further tightening as inflation stays elevated and fiscal momentum strengthens.
The BOJ also flagged overseas risks, including potential fallout from U.S. tariffs under President Trump and the uncertain global impact of artificial intelligence demand.
Markets now expect the BOJ’s next hike — the first since January — by the end of March 2026, though many economists see December as increasingly likely.
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