Bank of Japan Holds Rate at 1.25% in 8-1 Vote, Raises FY2027 Inflation Forecast

The Bank of Japan kept its short-term policy rate at around 1.25 percent on Oct. 30, 2026, the BOJ said in its Statement on Monetary Policy.

Split vote. The decision passed by an 8-1 majority. Board member Hajime Takata dissented and proposed raising the rate to around 1.5 percent, saying that with underlying inflation having reached the price stability target, the bank needs to step up the pace of moving toward the neutral rate, according to the statement. His proposal was defeated.

Inflation forecast raised. In its October Outlook Report, the BOJ raised the median forecast of board members for fiscal 2027 CPI inflation excluding fresh food to 2.6 percent from 2.4 percent in July. The forecast excluding fresh food and energy for fiscal 2027 is 2.7 percent, compared with 2.6 percent in July.

2% target. The BOJ said underlying CPI inflation is at a level generally consistent with its 2 percent price stability target and is expected to remain around that level.

Upside risks. The bank said risks to the price outlook are skewed to the upside, warning that inflation expectations could rise and underlying inflation could move above the target as firms shift more toward raising wages and prices.

ETF sales. The BOJ also said it will speed up sales of its ETF holdings to about 860 billion yen a year on a book value basis, starting in January 2027.