Bank of Japan (BOJ) kept its policy rate at 1.25% after a two‑day meeting on Friday, announcing that underlying inflation has finally hit the 2% target for the first time in the country’s history. All 30 economists surveyed by Bloomberg had predicted the rate hold, and the BOJ’s statement confirmed the benchmark policy stance.
More than 80% of economists now see a rate hike in December, a shift from the BOJ’s previous focus on coaxing inflation up. The central bank said it is "vital" to keep inflation around the current level to avoid overshooting the target.
In a move aimed at tightening policy, the BOJ announced it would nearly triple the pace of its ETF sales to about ¥860 billion per year, cutting the unwinding process to 43 years from the previous 110‑year estimate. This aggressive asset‑sale schedule signals a more assertive stance in the coming months.
The yen steadied to 157.12 per dollar after the decision, slipping from 157.52 before the meeting. Traders are watching Governor Kazuo Ueda’s 3:30 p.m. press briefing for clues on the timing and magnitude of a potential hike.
If a December hike materializes, markets could see tighter liquidity and a firmer yen, impacting bond yields and global risk sentiment. Investors should keep an eye on the BOJ’s next policy review and the evolving inflation data for further guidance.