The Bank of Japan is expected to keep its benchmark interest rate unchanged at a two-day policy meeting starting Thursday, choosing to assess the economic impact of its previous rate hike to a 30-year high and the recent decline in the yen that has concerned Japanese authorities.
The Policy Board is also monitoring rising Japanese government bond yields, which would typically help stabilize the yen against the U.S. dollar, especially as financial markets anticipate further fiscal stimulus under Prime Minister Sanae Takaichi’s government, News.Az reports, citing Kyodo.
At the conclusion of the meeting, the BOJ is expected to release updated economic and inflation forecasts. Analysts predict the central bank will revise upward its growth outlook for the current and next fiscal year, as concerns ease over the economic impact of higher U.S. tariffs.
In December, the BOJ raised its benchmark rate to around 0.75 percent, the highest level since 1995, noting that the likelihood of achieving its 2 percent inflation target was improving.
Governor Kazuo Ueda has indicated that the central bank is ready to continue raising rates if economic activity and inflation developments align with expectations, highlighting that interest rates remain significantly low when adjusted for inflation.
Markets will closely watch Ueda’s comments for clues on the timing of the next rate hike. The yen’s weakness has fueled expectations of faster inflation in resource-scarce Japan, and ongoing wage growth could provide further justification for tighter monetary policy.