Bank of Japan Holds Rates at 1% as Yen Swings After Intervention

TLDR

• The Bank of Japan kept its policy rate unchanged at 1%.
• The BOJ voted 8-1 to hold rates, with Hajime Takata backing a hike.
• Japan’s core inflation may rise clearly above 2% from September.
• The yen swung after Japan reportedly intervened to support the currency.
• Analysts expect the BOJ could raise rates again before year-end.

The Bank of Japan kept its policy rate unchanged at 1% on Friday, while warning that core inflation may rise clearly above its 2% target from September.

BOJ Holds Rates in Split Decision

The central bank voted 8-1 to hold rates steady, extending its cautious approach after earlier tightening. Board member Hajime Takata dissented and proposed raising the policy rate to 1.25%.

The decision came as inflation risks remained active across Japan’s economy. The BOJ said wage increases are being passed into selling prices, while crude oil costs and yen weakness continue to add pressure.

Japan’s core inflation stood at 1.6% in July and has stayed below 2% for most of 2026. However, the central bank warned that underlying inflation could move “clearly above” 2% from the second half of the fiscal year.

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