BOJ Skips Rate Hike amid Middle East Tensions

Tokyo, April 28 (Jiji Press)--The Bank of Japan decided Tuesday to keep its monetary policy unchanged while raising its fiscal 2026 inflation forecast, in light of higher crude oil prices amid tensions in the Middle East.

At a two-day meeting that ended Tuesday, the BOJ's Policy Board voted six to three to maintain the policy of guiding the unsecured overnight call rate, Japan's benchmark short-term interest rate, to around 0.75 pct. The policy rate was kept unchanged for three meetings in a row after being raised from around 0.5 pct last December.

The three dissenting Policy Board members--Junko Nakagawa, Hajime Takata and Naoki Tanaka--proposed raising the policy rate to around 1.0 pct, citing increasing inflation risks, but it was rejected by a majority vote.

The BOJ also adopted its latest quarterly Outlook for Economic Activity and Prices report, in which the central bank boosted its growth forecast for Japan's core consumer price index in fiscal 2026, which started this month, to 2.8 pct from 1.9 pct. The growth outlook of the core CPI, which excludes often volatile fresh food prices, was revised up to 2.3 pct from 2.0 pct for fiscal 2027. The newly disclosed core CPI growth projection for fiscal 2028 stood at 2.0 pct.

Also in the report, the BOJ cut its growth projection for Japan's real gross domestic product for fiscal 2026 to 0.5 pct from 1.0 pct. The GDP growth outlook was revised down to 0.7 pct from 0.8 pct for fiscal 2027. For fiscal 2028, GDP growth is estimated at 0.8 pct.

[Copyright The Jiji Press, Ltd.]