BOJ Maintains Interest Rates at 1%, Cautions Inflation May Exceed Target
The Bank of Japan (BoJ) held its policy rate steady at 1% on Friday, with an 8-1 vote in favor. The central bank warned that underlying inflation could surpass its 2% target amid rising bond yields and a weak yen. Although the decision aligns with market expectations for now, officials remain open to accelerating future hikes beyond the current pace of one every six months. The yen weakened against the dollar but saw some recovery after Tokyo reportedly intervened by selling dollars and buying yen. The 10-year Japanese government bond yield remains near multi-decade highs at around 2.8%. Analysts are closely watching Governor Kazuo Ueda's post-meeting comments for signals on future rate hikes. While core inflation in Japan is currently below the target, it has been held down by subsidies for energy and school fees. Without these supports, underlying price pressures have already exceeded 2%, according to some BOJ officials.
Topics: Bank of Japan bond yields inflation interest rates yen