Overview

• The Bank of Japan maintained its policy rate at 0.5% at the July 30-31 meeting and moderated the pace of its balance sheet drawdown.
• June meeting minutes showed some policymakers are ready to resume rate hikes once US trade tensions ease and inflation remains above target.
• The BOJ raised its inflation forecasts for the current financial year and presented a less pessimistic outlook on economic growth.
• MUFG CEO Hironori Kamezawa said an October rate increase is possible, although his bank’s official view sees a hike more likely in early 2026 due to tariff pressures.
• Investors and financial institutions have shifted their Japanese government bond strategies in preparation for a possible policy tightening by year-end.