BOJ keeps rates steady, declares victory in hitting price target
TLT•The Bank of Japan held its policy rate at 1.25%, said underlying inflation had roughly reached its 2% target and raised its fiscal 2027 core inflation forecast to 2.6%. It also plans to accelerate annual ETF sales to 860 billion yen from 330 billion yen starting in January.
1. Rate decision and outlook
The Bank of Japan held its policy rate at 1.25% on Friday, while saying underlying inflation was generally consistent with its 2% target and expected to remain around that level. Board member Hajime Takata dissented, proposing unsuccessfully to raise the rate to 1.5%.
2. Inflation forecast and ETF sales
The BOJ raised its core consumer inflation forecast for the fiscal year ending March 2028 to 2.6%, from 2.4% three months earlier. In a surprise move, it said it would accelerate sales of exchange-traded funds from January to 860 billion yen ($5.45 billion) a year, from 330 billion yen.
3. Rate path and price pressures
The central bank said it would focus on anchoring underlying inflation around 2%, signaling it could raise rates again. Most analysts polled expected a rate increase to 1.5% in December, followed by further hikes next year; Tokyo's annual core inflation exceeded the BOJ's 2% target in October.
