BOJ holds rates as underlying inflation aligns with 2% target for first time since 2013 — SkimNews
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- BOJ said underlying inflation was “generally consistent” with its 2% target for the first time since adopting the target in 2013, replacing its previous description of inflation as “approaching 2 percent.”
- BOJ held its policy rate at 1.25%, the highest level since 1995, in an 8-1 vote; Hajime Takata dissented and wanted the rate raised to 1.5%.
- BOJ raised its fiscal-year 2027 inflation forecast to 2.6% from 2.4% and its “core-core” forecast to 2.7% from 2.6%; the latter excludes fresh food and energy.
- BOJ flagged the risk of underlying inflation deviating upward beyond 2%, saying firms’ behavior was shifting toward higher wages and prices and citing “various factors that could drive up prices.”
- CNBC surveyed 16 economists before the decision, all of whom expected the BOJ to set the stage for a rate hike in December or January next year; 13 projected a terminal rate of 1.75% to 2% by around mid-2027.
- Satsuki Katayama told parliament Japan was “on the cusp of shifting to a period of sustained inflation driven by rising wages,” while inflation-adjusted wages rose for an eighth straight month in August, up 1.5% year over year.
- Japan recorded 2.1% core inflation in September—the highest 2026 reading and above expectations—even as experts said energy subsidies from the Takaichi administration were holding CPI down.
Why it matters: For Japanese borrowers and savers, there is no immediate change: the policy rate remains at 1.25%. The debate is sharper because the BOJ calls inflation target-consistent, Hajime Takata alone sought 1.5%, and all 16 surveyed economists expected a December or January hike.
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