BOJ holds rates, signals cautious path as inflation outlook rises

The Bank of Japan (BOJ) kept its key overnight call rate at 0.5% on July 31, in a widely anticipated move that follows a two-day policy meeting. Governor Kazuo Ueda moved to tamp down market speculation of an imminent rate hike, saying the central bank was not at risk of falling behind the curve on inflation, even as the yen weakened on his remarks.

The decision, unanimously agreed by the BOJ’s nine-member board and in line with forecasts from all 56 surveyed economists, comes as the bank raised its median inflation projection for the current fiscal year to 2.7% from 2.2%. The upward revision — driven by persistent food price gains — also extends into fiscal years 2026 and 2027, exceeding market expectations.