Bank Of Japan Keeps Key Rate On Hold

(RTTNews) - The Bank of Japan left its interest rate unchanged even as inflation continued to remain above 2 percent, and also left its real growth and inflation outlook more or less unchanged.

The policy board of the Bank of Japan decided, by a 7-2 majority vote, to hold the uncollateralized overnight call rate at around 0.5 percent.

Previously, the BoJ had raised the benchmark rate to the current level from 0.25 percent in January.

This was the first rate-setting meeting of the board after Sanae Takaichi took office as prime minister. The decision came a day after the US Federal Reserve lowered its key rates by quarter point following a similar cut in September.

In the quarterly outlook, the BoJ kept its inflation forecast unchanged for the current fiscal year and for the coming two years. For the fiscal 2025, inflation was seen at 2.7 percent, unchanged from the July report.

The annual increase in consumer prices expected to slow below 2 percent through the first half of fiscal 2026, with the waning effects of the rise in food prices. The inflation rate was expected to reach 1.8 percent in the next fiscal year.

Thereafter inflation is forecast to increase gradually, to hit the price stability target in the second half of the projected period. The bank estimated inflation at 2 percent in the fiscal 2027.

The BoJ noted that economic growth is set to rise, with overseas economies returning to a moderate growth path.

The bank slightly raised its growth forecast for the current fiscal year to 0.7 percent from 0.6 percent. Meanwhile, the outlook for the fiscal 2026 and 2027 was retained at 0.7 percent and 1.0 percent, respectively.