The Bank of Japan maintains interest rates unchanged and raises inflation expectations for this year and next

The Bank of Japan has kept its policy unchanged for the fourth consecutive time, stating that inflation expectations have risen moderately while remaining vigilant about uncertainties in trade policy.

On Thursday, July 31, the Bank of Japan passed its latest interest rate decision with a 9-0 vote, maintaining the interest rate at 0.5%, in line with market expectations.

In its statement, the bank reiterated that Japan's real interest rates are currently at extremely low levels, and it will raise rates if economic and price outlooks are realized.

The bank emphasized that there is uncertainty regarding trade policy and its progress, which still has a high impact on the economic and price outlook. Previously, the U.S. and Japan reached a trade agreement.

In the quarterly outlook report released simultaneously, the Bank of Japan raised its inflation outlook for this year, increasing the core CPI forecast for fiscal year 2025 from 2.2% to 2.7%, and the core CPI forecast for fiscal year 2026 from 1.7% to 1.8%.

Regarding economic forecasts, the Bank of Japan expects the GDP forecast for fiscal year 2025 to be 0.6%, up from 0.5% previously, and keeps the GDP forecast for fiscal year 2026 at 0.7%.

At 14:30 Beijing time, Bank of Japan Governor Kazuo Ueda will hold a press conference to explain the interest rate decision.

After the announcement, the yen strengthened against the dollar, rising over 0.5% to 148.66.