Bank of Japan Keeps Policy Rate at 1.25% as Underlying Inflation Reaches 2% Target

Key facts

• The Bank of Japan (BOJ) held its benchmark policy rate unchanged at 1.25% at the end of a two-day meeting on Friday, October 30, 2026, and indicated for the first time that underlying inflation has reached its 2% target.
• The rate decision was made by an 8-1 vote, with Hajime Takata dissenting in favor of a rate hike.
• More than 80% of economists expect another rate hike in December, and the BOJ said it is vital to keep inflation around the current level while warning of upside risks.
• The BOJ announced it would nearly triple the pace of selling its Exchange-Traded Fund holdings starting in January, at about ¥860 billion ($5.5 billion) per year, a pace that would take about 43 years to complete.
• The yen strengthened to around 157.12 per dollar from 157.52 just before the decision.
• Japan's benchmark rate is at a 31-year high; the BOJ last raised rates on September 18, three months after a June hike, the shortest interval between increases since 1990.
• The BOJ was the last of three major central banks to meet this week, with the Federal Reserve and European Central Bank also holding rates; last month all three raised rates in sync for the first time.
• Governor Kazuo Ueda's press briefing was scheduled for around 3:30 p.m. local time, where investors looked for signals on the next hike.