Overview
- The Bank of Japan kept its short-term policy rate at 1.25% in an 8-1 vote on Friday, Oct. 30, with board member Hajime Takata the sole dissenter who wanted an immediate rise to about 1.5%.
- In its quarterly Outlook Report the BOJ said underlying inflation is now broadly consistent with its 2% target and raised the core CPI forecast for fiscal 2027 to 2.6%.
- Officials warned that upside risks from higher oil prices, a weak yen and stronger domestic demand, including wage gains and AI-related activity, could push inflation above target and must be guarded against.
- The bank said it stands ready to tighten policy again as soon as December and will monitor financial conditions and data before acting.
- To shrink long-held market distortions the BOJ will more than double annual ETF disposals to about 860 billion yen from January 2027, a move that modestly increases stock supply while leaving J-REIT sales unchanged.