The BOJ judged that underlying inflation had reached 2%, marking a policy milestone after about 14 years. Interest rates were maintained at current levels, while the BOJ moves steadily to shift policy toward maintaining price stability.
At its Monetary Policy Meeting on 30 October, the BOJ judged that the rate of increase in underlying prices had reached the 2% target. This marks a milestone in reviewing the long-term framework of monetary policy that has been in place for about 14 years. The policy rate was left unchanged at around 1.25% by a majority vote. The focus is therefore shifting from pushing prices higher to maintaining stable inflation at 2%.
At a press conference, Governor Kazuo Ueda said that “upside risks to the price outlook are significant,” indicating that the BOJ would maintain its policy of raising rates. The BOJ had raised the rate to around 0.9–1.0% at its June meeting and to around 1.25% at its September meeting, but avoided accelerating the pace. Policy Board member Hajime Takata argued for raising the rate to around 1.5% and opposed maintaining the current fiscal policy stance.
In its Outlook for Economic Activity and Prices report published the same day, the BOJ revised its view that underlying inflation was approaching 2% at a “broadly consistent level” and indicated that it would raise the pace of ETF sales, measured at book value, from about ¥330 billion a year currently to about ¥860 billion from January next year.
The forecast for real domestic GDP growth in fiscal 2026 was revised up to 0.7% from 0.6% as of July, reflecting stronger demand for artificial intelligence (AI). The BOJ judged that wage increases had become established and that wages and prices were both rising moderately. The need to maintain an accommodative financial environment has ended, and monetary policy is shifting toward curbing excessive inflation.