On Oct. 30, the Bank of Japan kept its policy rate at 1.25%, raised its fiscal 2027 inflation forecasts and said further increases remained possible, while judging underlying inflation to be broadly in line with its 2% target.
The decision passed 8-1, with board member Hajime Takata dissenting and proposing a higher rate of 1.5%. The BOJ raised its fiscal 2027 forecast for core inflation to 2.6%, from 2.4%. It also raised its “core-core” forecast, which excludes fresh food and energy, to 2.7%, from 2.6%.
The BOJ warned that underlying inflation could exceed the target, citing companies’ shift toward raising wages and prices. The hold followed a rate increase in September that brought the benchmark to 1.25%. The October decision left borrowing costs unchanged.
The BOJ’s assessment and forecasts point to continuing concern about price pressures. A survey of 16 economists reported by CNBC found that all expected the bank to signal that it was preparing for another rate increase in December or January. The BOJ did not commit to a date.