Economic Buzz: BOJ maintains 1% interest rate as core inflation outlook strengthens

The Bank of Japan left its benchmark interest rate unchanged at 1% in an 8-1 policy decision, while signaling that inflationary pressures are expected to strengthen in the coming quarters. The central bank projected core inflation to rise clearly above its 2% target in the second half of fiscal 2026, driven by stronger wage growth, elevated crude oil prices and a weaker yen. However, the BOJ expects inflation to gradually moderate back toward its target as energy prices ease, even as one board member voted in favor of a 25-basis-point rate hike.

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