BOJ Holds Rate at 1.25%, Upgrades Forecasts and Declares Inflation Target Met

The Japanese yen found support near 157.8 per dollar after the Bank of Japan held its benchmark interest rate at 1.25% in an 8-1 vote. Board member Hajime Takata dissented, calling for a 25-basis-point increase to 1.50%. For the first time since 2013, the central bank officially declared that underlying inflation has reached its 2% target, warning of upside price risks. Policymakers raised the fiscal 2027 core CPI forecast to 2.6% from 2.4% and the core-core projection to 2.7%. The BOJ also unanimously approved more than doubling annual ETF divestments to roughly 860 billion yen beginning January 2027.