Mars Finance reports: On July 31, the Bank of Japan held its policy rate steady at 1%, as expected. Last month, the bank raised its benchmark rate to the highest level since 1995. Bank of Japan policymaker Sō Takada dissented, advocating for a 25-basis-point rate hike, arguing that the economic situation has entered a new phase and that the Bank of Japan must adopt a more flexible approach to address upside price risks and changes in global financial conditions. The Bank of Japan stated it will continue raising interest rates in line with economic and price developments and financial conditions, noting that underlying inflation is nearing 2%, financial conditions remain accommodative, and both significant downside risks to economic activity and upside risks to prices have diminished. In its latest economic projections, the Bank of Japan lowered its core CPI forecast for fiscal year 2026 from 2.8% to 2.5% and raised its GDP growth forecast for fiscal year 2026 from 0.5% to 0.6%. (Jinshi)
BOJ Holds 1% Interest Rate Amid Inflation Projections
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Summary
On July 31, 2026, the Bank of Japan (BOJ) held its policy rate at 1% in an 8-1 vote, as expected. The rate had been raised to its highest level since 1995 the previous month. Commissioner Sota Takeda opposed the decision, advocating for a 25-basis-point increase. The BOJ noted that core inflation is near 2% and risks have diminished, revising its 2026 CPI forecast down to 2.5% from 2.8%. BTC as a hedge against inflation remains a key topic among investors. The bank also raised its GDP forecast to 0.6% and reaffirmed its commitment to CFT (Countering the Financing of Terrorism) compliance.
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