The Bank of Japan decided on October 30 to keep its policy rate at 0.5%. Citing economic uncertainties from U.S. tariff hikes, it maintained a cautious stance. This was the first meeting since Prime Minister Sanae Takaichi took office.
The Bank of Japan (BOJ) voted 7-2 on October 30 to keep its policy rate at 0.5%, marking the sixth consecutive hold. Dissenters Hajime Takata and Naoki Tamura proposed raising it to 0.75%, but the motion was rejected.
BOJ Governor Kazuo Ueda said at a press conference that the bank needs to monitor whether higher U.S. tariffs will erode corporate earnings and influence wage and price setting. "We have no prejudgment about whether and when to raise the policy rate," he added.
The meeting was the first since Prime Minister Sanae Takaichi took office this month, attended by economic and fiscal policy minister Minoru Kiuchi. In its quarterly Outlook for Economic Activity and Prices, the BOJ noted that reactions of overseas economies to trade policies remain "highly uncertain." It raised the fiscal 2025 real GDP growth forecast to 0.7% from 0.6%, while keeping 2026 at 0.7% and 2027 at 1.0%. Inflation forecasts stayed at 2.7% for 2025, 1.8% for 2026, and 2.0% for 2027. Risks to economic activity in 2026 are skewed to the downside.
The BOJ statement warned that "high uncertainties still remain regarding the impact of trade and other policies on economic activity and prices at home and abroad." The bank ended negative rates in March last year and raised them in January to a 17-year high, but paused tightening at the start of 2025. Most economists expected the hold; a Bloomberg survey of 50 analysts showed only five forecasting a hike.
Takaichi, an advocate of Shinzo Abe's Abenomics including monetary easing, saw her ministers affirm the BOJ's independence. The yen weakened modestly against the dollar after the decision.