{"id":299105,"date":"2026-01-23T08:14:06","date_gmt":"2026-01-23T08:14:06","guid":{"rendered":"https:\/\/www.europesays.com\/ie\/299105\/"},"modified":"2026-01-23T08:14:06","modified_gmt":"2026-01-23T08:14:06","slug":"boj-stands-pat-but-primes-market-for-more-hikes-with-hawkish-inflation-signals","status":"publish","type":"post","link":"https:\/\/www.europesays.com\/ie\/299105\/","title":{"rendered":"BOJ stands pat but primes market for more hikes with hawkish inflation signals"},"content":{"rendered":"<ul data-testid=\"Summary\" class=\"summary-module__summary__QjADA\">\n<li data-testid=\"Body\" class=\"text-module__text__0GDob text-module__dark-grey__UFC18 text-module__regular__qJJtA text-module__small__sph8i body-module__base__o--Cl body-module__small_body__gOmDf summary-module__point__UgXPz\">BOJ keeps key policy rate steady at 0.75% as widely expected<\/li>\n<li data-testid=\"Body\" class=\"text-module__text__0GDob text-module__dark-grey__UFC18 text-module__regular__qJJtA text-module__small__sph8i body-module__base__o--Cl body-module__small_body__gOmDf summary-module__point__UgXPz\">Board revises up growth forecasts for fiscal 2025, 2026<\/li>\n<li data-testid=\"Body\" class=\"text-module__text__0GDob text-module__dark-grey__UFC18 text-module__regular__qJJtA text-module__small__sph8i body-module__base__o--Cl body-module__small_body__gOmDf summary-module__point__UgXPz\">Board sees risks to growth, inflation roughly balanced<\/li>\n<li data-testid=\"Body\" class=\"text-module__text__0GDob text-module__dark-grey__UFC18 text-module__regular__qJJtA text-module__small__sph8i body-module__base__o--Cl body-module__small_body__gOmDf summary-module__point__UgXPz\">Hawkish member Takata proposes rate hike, turned down by board<\/li>\n<\/ul>\n<p>TOKYO, Jan 23 (Reuters) &#8211; The Bank of Japan retained its hawkish inflation forecasts on Friday after keeping policy steady, signalling its conviction that a moderate economic recovery justifies raising still-low borrowing costs further in a politically charged atmosphere.<\/p>\n<p>In a sign of its caution over the inflationary effects of a weak yen, the central bank said the currency&#8217;s moves could prod firms to pass on rising import costs and push up underlying consumer prices &#8211; a key gauge determining its rate-hike timing.<\/p>\n<p data-testid=\"promo-box\" class=\"text-module__text__0GDob text-module__dark-grey__UFC18 text-module__regular__qJJtA text-module__small__sph8i body-module__base__o--Cl body-module__small_body__gOmDf article-body-module__promo-box__hVl8h\"> Sign up  <a data-testid=\"Link\" referrerpolicy=\"no-referrer-when-downgrade\" href=\"https:\/\/www.reuters.com\/world\/asia-pacific\/boj-keeps-rates-steady-raises-growth-inflation-forecasts-2026-01-23\/undefined?location=article-paragraph&amp;redirectUrl=%2Fworld%2Fasia-pacific%2Fboj-set-hold-rates-steady-election-yield-spike-cloud-outlook-2026-01-22%2F\" class=\"text-module__text__0GDob text-module__inherit-color__PhuPF text-module__inherit-font__1P1hv text-module__inherit-size__EyiQW link-module__link__INqxZ link-module__underline_default__-okuC\" rel=\"nofollow noopener\" target=\"_blank\">here.<\/a><\/p>\n<p>Board member Hajime Takata also proposed raising rates for the second straight meeting, which found no other voices in support but highlighted the hawkish momentum within the central bank.<\/p>\n<p>&#8220;We will continue to raise interest rates if our economic and price forecasts materialise. As for our rate-hike path and pace, that will depend on economic, price and financial developments at the time,&#8221; BOJ Governor Kazuo Ueda told a press conference.<\/p>\n<p>&#8220;We will carefully look at available data at each policy meeting, and update our view on economic and price developments, risks and the likelihood of achieving our forecasts,&#8221; he said.<\/p>\n<p>At a two-day meeting that ended on Friday, the BOJ maintained its key policy rate at 0.75% in a widely expected decision after having just hiked the rate from 0.5% in December.<\/p>\n<p>Markets had been keenly watching out for Ueda&#8217;s post-meeting press conference for hints on when the BOJ might next raise rates, a decision complicated by a fresh bout of <a data-testid=\"Link\" referrerpolicy=\"no-referrer-when-downgrade\" href=\"https:\/\/www.reuters.com\/world\/asia-pacific\/buyers-flee-japanese-debt-takaichi-hits-ground-spending-2026-01-20\/\" class=\"text-module__text__0GDob text-module__inherit-color__PhuPF text-module__inherit-font__1P1hv text-module__inherit-size__EyiQW link-module__link__INqxZ link-module__underline_default__-okuC\" rel=\"nofollow noopener\" target=\"_blank\">market volatility<\/a> caused by Prime Minister Sanae Takaichi&#8217;s move to <a data-testid=\"Link\" referrerpolicy=\"no-referrer-when-downgrade\" href=\"https:\/\/www.reuters.com\/world\/asia-pacific\/japans-looming-election-heightens-chance-sales-tax-cut-2026-01-19\/\" class=\"text-module__text__0GDob text-module__inherit-color__PhuPF text-module__inherit-font__1P1hv text-module__inherit-size__EyiQW link-module__link__INqxZ link-module__underline_default__-okuC\" rel=\"nofollow noopener\" target=\"_blank\">call a snap election<\/a> next month.<\/p>\n<p>Takaichi&#8217;s dovish monetary and fiscal credentials pose a particular challenge for the BOJ given Ueda&#8217;s inclination to normalise policy after decades of stimulatory rates.<\/p>\n<p>In a quarterly outlook report, the BOJ painted a more optimistic view of the economy to say a positive cycle of income and expenditure will &#8220;gradually strengthen.&#8221;<\/p>\n<p>The BOJ raised its growth forecast for fiscal 2025 and 2026, and maintained its view the economy will remain on course for a moderate recovery.<\/p>\n<p>It also revised up its core consumer inflation forecast for fiscal 2026 to 1.9% from 1.8% three months ago, adding that risks to the economic and price outlook were roughly balanced.<\/p>\n<p>While food price growth will moderate, underlying inflation will continue to gradually increase as companies continue to pass on rising labour costs, the report said, signalling conviction that Japan is making progress in meeting the prerequisite for further rate hikes.<\/p>\n<p>The BOJ also warned of the inflationary pressure emanating from a weak yen, which pushes up import costs.<\/p>\n<p>&#8220;Exchange rate moves are more likely to affect prices than in the past. Attention must be paid to how currency moves affect underlying inflation through changes in the public&#8217;s perception of future price moves,&#8221; the report said.<\/p>\n<p>Analysts saw the report as signalling more rate hikes in coming months.<\/p>\n<p>&#8220;After its hike in December, it is no surprise that the BOJ remained on hold today. However, the central bank&#8217;s outlook report hints at growing hawkishness, with officials revising up their growth forecasts for the coming year and, crucially, also nudging up their inflation expectations for the next couple of years,&#8221; said Fred Neumann, chief Asia economist at HSBC in Hong Kong.<\/p>\n<p>BOJ REACTION TO YIELD MOVE IN FOCUS<\/p>\n<p>Japan&#8217;s economy has weathered the hit from U.S. tariffs and is likely to get a lift from Takaichi&#8217;s stimulus package focusing on steps to cushion the blow from rising living costs.<\/p>\n<p>But the premier&#8217;s vow to strengthen her expansionary fiscal policy and suspend the 8% sales tax on food has stoked fears of additional debt issuance, leading to the spike in bond yields, which could hurt the economy.<\/p>\n<p>The central bank is thus caught between a need to keep yen bears at bay with hawkish communication, without triggering further rises in bond yields on expectations of hefty spending by Takaichi&#8217;s government.<\/p>\n<p>JGB yields surge under PM Takaichi<\/p>\n<p>The yield spike has drawn renewed attention to the BOJ&#8217;s quantitative tightening plan, under which it has been unwinding its years of massive stimulus by gradually slowing its bond buying at a set pace to reduce its huge balance sheet.<\/p>\n<p>The BOJ has been tapering bond buying since 2024 under a pre-set, moderate pace. But it has said it could suspend this tapering or conduct emergency bond-buying operations to cope with extreme market stress.<\/p>\n<p>Ueda has repeatedly said while bond yields should be set by markets, the BOJ will step in if they make &#8220;exceptional, unusual moves.&#8221;<\/p>\n<p>The&#8217;s BOJ directional change in 2024 saw it raising policy rate several times and tapering bond purchases on the view Japan was on the cusp of durably achieving the bank&#8217;s 2% inflation target.<\/p>\n<p data-testid=\"SignOff\" class=\"text-module__text__0GDob text-module__dark-grey__UFC18 text-module__regular__qJJtA text-module__extra_small__8Buss body-module__full_width__kCIGb body-module__extra_small_body__Bfz20 sign-off-module__text__LQAMP\">Reporting by Leika Kihara and Makiko Yamazaki; additional reporting by Kantaro Komiya and Satoshi Sugiyama; Editing by William Mallard and Shri Navaratnam<\/p>\n<p data-testid=\"Body\" dir=\"ltr\" class=\"text-module__text__0GDob text-module__dark-grey__UFC18 text-module__regular__qJJtA text-module__small__sph8i body-module__base__o--Cl body-module__small_body__gOmDf article-body-module__element__5eCce article-body-module__trust-badge__5mS3f\">Our Standards: <a data-testid=\"Link\" target=\"_blank\" referrerpolicy=\"no-referrer-when-downgrade\" href=\"https:\/\/www.thomsonreuters.com\/en\/about-us\/trust-principles.html\" rel=\"noopener nofollow\" class=\"text-module__text__0GDob text-module__dark-grey__UFC18 text-module__medium__2Rl30 text-module__small__sph8i link-module__link__INqxZ link-module__underline_default__-okuC link-module__with-icon__qlg76\">The Thomson Reuters Trust Principles., opens new tab<\/a><\/p>\n<p><a href=\"https:\/\/www.reutersagency.com\/en\/licensereuterscontent\/?utm_medium=rcom-article-media&amp;utm_campaign=rcom-rcp-lead\" target=\"_blank\" dir=\"ltr\" class=\"button-module__link__A3sD0 button-module__secondary__70gBu button-module__round__QDFgq button-module__w_auto__Sem-F\" data-testid=\"LicenceContentButton\" rel=\"nofollow noopener\">Purchase Licensing Rights<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"BOJ keeps key policy rate steady at 0.75% as widely expected Board revises up growth forecasts for fiscal&hellip;\n","protected":false},"author":2,"featured_media":299106,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":"","_share_on_mastodon":"0"},"categories":[174],"tags":[2786,82703,14428,79,84370,82538,82545,82546,83395,82535,82556,82549,82541,84149,82550,82776,82553,83396,84460,82536,84041,83397,83391,83393,84146,82531,82777,82547,82539,82557,82537,82540,82554,82552,82710,85720,83394,82548,82551,82702,83115,83116,179,84148,18,87582,19,84365,84368,17,11203,83122,82565,82507,85212,82534,82533],"class_list":["post-299105","post","type-post","status-publish","format-standard","has-post-thumbnail","category-economy","tag-asia","tag-asxpac","tag-boj","tag-business","tag-cen","tag-destabx","tag-destafa","tag-destbnx","tag-destc","tag-destcsa","tag-destd","tag-destdnp","tag-deste","tag-destef-markets-macromatters","tag-destfun","tag-destg","tag-destgns","tag-destgro","tag-destj","tag-destlby","tag-destm","tag-destmtl","tag-desto","tag-destoil","tag-destortao","tag-destousbsm","tag-destpge","tag-destpsc","tag-destrast","tag-destrbn","tag-destreulb","tag-destrnp","tag-destrws","tag-destrwsa","tag-destseabs","tag-destseatp","tag-destsof","tag-destu","tag-destucdptest","tag-easia","tag-eci","tag-eco","tag-economy","tag-efmarkets-macromatters","tag-eire","tag-frx","tag-ie","tag-infl","tag-int","tag-ireland","tag-jp","tag-mce","tag-mtpix","tag-news1","tag-plcy","tag-topcmb","tag-topnws"],"share_on_mastodon":{"url":"","error":"Validation failed: Text character limit of 500 exceeded"},"_links":{"self":[{"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/posts\/299105","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/comments?post=299105"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/posts\/299105\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/media\/299106"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/media?parent=299105"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/categories?post=299105"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/tags?post=299105"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}