BOJ Keeps Policy Rate Unchanged, Ups FY 2026 Growth Outlook

Tokyo, Jan. 23 (Jiji Press)–The Bank of Japan decided Friday to keep its policy interest rate unchanged while raising its growth outlook for Japan’s gross domestic product in fiscal 2026, which starts in April. At its two-day policy-setting meeting through the day, the BOJ’s Policy Board voted eight to one to maintain the policy of guiding the unsecured overnight call rate to around 0.75 pct. The policy interest rate was raised to the level from around 0.5 pct at the central bank’s previous policy-setting meeting in December 2025, which marked its first rate hike since January that year. In its new quarterly Outlook for Economic Activity and Prices report, adopted at the latest meeting, the BOJ raised its fiscal 2026 real GDP growth forecast to 1.0 pct from the October estimate of 0.7 pct, after Prime Minister Sanae Takaichi’s administration announced a comprehensive economic stimulus package in November last year. The fiscal 2025 growth projection was raised to 0.9 pct from 0.7 pct, while the fiscal 2027 estimate was lowered to 0.8 pct from 1.0 pct. The BOJ raised the growth estimate for Japan’s core consumer price index in fiscal 2026 to 1.9 pct from 1.8 pct. The CPI growth forecasts were left intact at 2.7 pct for fiscal 2025 and at 2.0 pct for fiscal 2027. The BOJ maintained its view that Japan’s inflation is likely to be at “a level that is generally consistent with the price stability target” of 2 pct in the second half of the quarterly report’s forecast period through fiscal 2027. Also in the report, the central bank said if economic and price trends proceed as expected, it will “continue to raise the policy interest rate and adjust the degree of monetary accommodation.” END [Copyright The Jiji Press, Ltd.]