Bank of Japan Holds Rate at 1.25% and Plans to Double ETF Sales Starting 2027
Key Facts
The Bank of Japan kept its interest rate at 1.25% at the conclusion of its meeting on October 30, 2026, with the decision reached by an 8-1 vote. Board member Hajime Takata dissented from the majority, voting instead for a hike to 1.5%, while the board also decided to double the pace of its exchange-traded fund (ETF) sales to 860 billion yen annually starting in January 2027.
The hold coincided with Tokyo inflation data showing the core consumer price index slowed to 2.6% in October 2026 from 2.7% in September. While inflation in the capital remained above the bank's 2% target, the Nikkei 225 index fell 2.6% to close at 62,960.60 points on October 30, 2026, and the dollar dropped to 157.50 yen during trading on the same day.
The Bank of Japan is scheduled to release the Summary of Opinions from the October meeting on November 10, 2026, followed by the full meeting minutes on December 23, 2026. Markets will look to these releases for further insight into the dissenting vote and the new asset sale plan ahead of the December meeting, where markets currently price an 80% chance of a rate hike.
Latest Updates · 6
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Update: The Bank of Japan officially declared on October 30, 2026, that underlying inflation has reached a level broadly consistent with its 2% target. The bank also raised its core inflation forecast for fiscal year 2027 to 2.6% from its previous estimate of 2.4%.
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Update: Japan's 10-year government bond yield fell below 2.8% following the central bank's decision on October 30, 2026. This move in the bond market occurred as the Bank of Japan signaled that underlying inflation has successfully reached its 2% target.
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Update: The Bank of Japan signaled that underlying inflation has reached its 2% target. This assessment provides a qualitative basis for the bank's future policy direction and its ongoing plan to reduce asset holdings, confirming that price growth has stabilized at the desired level.
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Update: The Bank of Japan raised its core CPI forecast for fiscal year 2027 to 2.6% from 2.4% on October 30, 2026. The bank stated in its report that underlying inflation is now generally consistent with its 2% target, signaling potential upside risks to the price outlook.
- Notable·
Update: The Bank of Japan stated that the country's underlying inflation has reached its 2% target. This confirmation provides a fundamental justification for the bank's current policy stance beyond the reported monthly consumer price index data.
- Notable·
Update: The Bank of Japan officially announced on October 30, 2026, that inflation has reached its 2% target. This declaration marks the achievement of a key policy milestone, providing a formal backdrop for the rate hold and the planned reduction of asset holdings.