BOJ Keeps Policy Unchanged, Raises Inflation Outlooks

Jiji Press

15:23 JST, July 31, 2025

Tokyo, July 31 (Jiji Press)—The Bank of Japan decided to keep its monetary policy unchanged Thursday while raising its inflation outlooks.

Members of the BOJ’s Policy Board at its two-day meeting from Wednesday unanimously voted to maintain the policy of guiding the unsecured overnight call rate, Japan’s benchmark short-term interbank lending rate, to around 0.5 pct.

The BOJ apparently determined that it is advisable to continue monitoring economic and price trends for some time, with many in the central bank believing that uncertainty remains over the course of the global economy although tariff negotiations between Japan and the United States were concluded.

In its new quarterly Outlook for Economic Activity and Prices report, adopted at the meeting, the Japanese central bank raised its projection for the country’s core consumer price index growth for fiscal 2025 to 2.7 pct from 2.2 pct shown in the previous report released in early May.

The hike reflects rising prices of rice and other food items. The CPI growth projection for fiscal 2026 was raised to 1.8 pct from 1.7 pct, and that for fiscal 2027 to 2.0 pct from 1.9 pct.

The BOJ maintained the view that underlying CPI inflation is “likely to be at a level that is generally consistent with” the bank’s price stability target of 2 pct in the second half of the current projection period through fiscal 2027.

The BOJ raised its forecast for the country’s real gross domestic product growth for fiscal 2025 to 0.6 pct from 0.5 pct while leaving that for fiscal 2026 and fiscal 2027 unchanged at 0.7 pct and 1.0 pct, respectively.

Japan’s economy has recovered moderately although some weakness has been seen in part, the bank said in the report.

At the same time, BOJ cautioned that it “remains highly uncertain” how trade and other policies of other countries will evolve and how economic activity and prices will react to them.