The BOJ decided to raise its policy rate by 0.25 percentage points to 1.25%. The market reaction was as expected, with attention focused on the timing of rate hikes in Japan and the US and the direction of monetary policy going forward.
At its monetary policy meeting, which ran through the 18th, the BOJ decided to raise its policy rate by 0.25 percentage points to 1.25%. The outcome of the meeting and the BOJ governor's press conference have put the future course of monetary policy at the center of market attention.
The statement included language concerning risks, stating that inflation could overshoot the 2% target. December is viewed as the base case for the next rate hike, with January 2027 also indicated as a possibility depending on circumstances.
2 Policy Board members voted against the rate hike. The presence of these 2 members, who are regarded as reflationists, is seen as a clue to how the market may read the vote.
At Governor Ueda's (植田) press conference in the afternoon, his description of monetary policy as having "entered a different phase" drew attention, prompting a series of questions about the possibility of consecutive rate hikes and a 0.50% increase.
As for the US interest-rate outlook, the median of the FOMC dot plot suggested expectations for an additional rate hike during 2026. The market was expected to focus on developments surrounding a BOJ rate hike in December and the direction of US monetary policy.