BOJ Continues to Hold Rates Steady in Light of U.S. Tariffs

Jiji Press

17:06 JST, October 30, 2025

TOKYO (Jiji Press) — The Bank of Japan decided Thursday to keep its policy interest rate unchanged while raising its gross domestic product growth outlook for fiscal 2025.

The BOJ kept the status quo for the sixth consecutive policy-setting meeting, as it apparently found it necessary to continue carefully monitoring the impact of higher U.S. tariffs.

At the two-day policy meeting through the day, the BOJ’s Policy Board voted seven to two to maintain the policy of guiding the unsecured overnight call rate to around 0.5%.

Policy Board members Hajime Takata and Naoki Tamura proposed raising the rate target to around 0.75%, as they did at the previous meeting in September, but this was rejected.

At a press conference later in the day, BOJ Gov. Kazuo Ueda said that he wants to spend a little more time monitoring whether higher U.S. tariffs will erode corporate earnings and affect how companies set wages and prices.

Ueda added that the central bank has “no prejudgment about whether and when to raise the policy rate.”

The latest policy-setting meeting was the first since Prime Minister Sanae Takaichi took office this month. It was attended by economic and fiscal policy minister Minoru Kiuchi.

In its new quarterly Outlook for Economic Activity and Prices report, adopted at the day’s meeting, the Japanese central bank said that it “remains highly uncertain how overseas economic activity and prices will react to trade and other policies in each jurisdiction.”

The bank raised its fiscal 2025 real GDP growth forecast to 0.7% from the July estimate of 0.6%. Meanwhile, it maintained the fiscal 2026 growth projection at 0.7% and the fiscal 2027 estimate at 1.0%.

“With regard to the risk balance, risks to economic activity are skewed to the downside for fiscal 2026,” the bank said in the report.

The inflation forecasts were also left intact, at 2.7% for fiscal 2025, 1.8% for fiscal 2026 and 2.0% for fiscal 2027.

The bank also said in the report that, if its forecasts prove to be accurate, it “will continue to raise the policy interest rate and adjust the degree of monetary accommodation” in accordance with improvement in economic activity and prices.