The Bank of Japan kept the uncollateralized overnight call rate at about 1.25 percent at its October 29 to 30 meeting, by eight votes to one. Hajime Takata dissented in favour of a rise to about 1.5 percent. The hold followed the September increase that took the rate to 1.25 percent, and the decision itself was widely expected; the information was in the quarterly Outlook report published with it.
In that report the bank said underlying consumer price inflation is at a level generally consistent with its 2 percent price stability target, the first time it has made that judgment in this form, and that it is expected to stay around that level. The board raised its median forecast for core inflation, excluding fresh food, in fiscal 2027 to 2.6 percent from 2.4 percent in July, held fiscal 2026 at 2.5 percent and fiscal 2028 at 2.0 percent, and trimmed fiscal 2027 growth to 0.7 percent from 0.8 percent. Risks to prices, the bank said, are skewed to the upside, because expectations could rise and push underlying inflation above target.
The bank repeated that it expects to continue raising the policy rate if economic activity and prices evolve as projected, and it more than doubled the planned pace of its exchange traded fund sales from January 2027 under amended disposal guidelines. The forecasts exclude the food consumption tax cut under review in the Diet; the bank estimates that, fully applied, it would lower fiscal 2027 core inflation by about 1.3 percentage points.
The next meeting falls in December, with the September meeting minutes due on November 5. With the policy rate inside the range the bank’s staff estimate as neutral, the case for December rests on the same evidence the Outlook cites: core inflation measures at or above target, Tokyo prices running hotter than the national print, and an explicit statement from the bank that the risks sit on the upside.