BOJ holds rates at 1%, warns of core inflation exceeding 2% target
The Bank of Japan kept its policy rate steady on Friday, as it warned that core inflation in the country could exceed its 2% target. In its outlook, the...
Key points
- The Bank of Japan kept its policy rate steady on Friday, as it warned that core inflation in the country could exceed its 2% target.
- In its outlook, the BOJ said that core inflation was likely to accelerate to a level "clearly above" 2% from the second half of its 2026 fiscal year, which runs from September to March.
- Inflation should then come down toward 2% as crude oil prices decline, it said.
- In a June 25 speech, BOJ Board Member Naoki Tamura said that in his personal view, underlying inflation has generally reached the BOJ's 2% target.
What happened
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The Bank of Japan kept its policy rate steady on Friday, as it warned that core inflation in the country could exceed its 2% target. In its outlook, the BOJ said that core inflation was likely to accelerate to a level "clearly above" 2% from the second half of its 2026 fiscal year, which runs from September to March. Inflation should then come down toward 2% as crude oil prices decline, it said. In a June 25 speech, BOJ Board Member Naoki Tamura said that in his personal view, underlying inflation has generally reached the BOJ's 2% target. With those removed, core inflation has been above 2%. Japan's core inflation for July came in at 1.6%, and has been below 2% for most of 2026.