Bank of Japan Holds Benchmark Interest Rate at 0.5% for Fourth Consecutive Time

BOJ Raises 2025 Inflation Forecast Significantly
From 2.2% to 2.7%

The Bank of Japan (BOJ), Japan's central bank, kept its benchmark interest rate unchanged at 0.5% on July 31.

Kazuo Ueda, Governor of the Bank of Japan (BOJ). Photo by Reuters Yonhap News

The BOJ decided to maintain the current level of its short-term policy rate, which serves as the benchmark interest rate, at the Monetary Policy Meeting held over two days through this date. As a result, the BOJ has left the benchmark interest rate unchanged at 0.5% for the fourth consecutive time.

Regarding the global economic impact of U.S. tariff policies, the BOJ stated that "a highly uncertain situation continues" and emphasized that "it is necessary to closely monitor the situation."

Previously, the BOJ ended its negative interest rate policy in March last year for the first time in 17 years, then raised the benchmark interest rate to 0.5% by January this year, and has maintained this level for six months.

The BOJ also released its quarterly "Outlook for Economic Activity and Prices" report on this day. The forecast for real gross domestic product (GDP) growth for fiscal 2025 (April 2025 to March 2026) was revised upward by 0.1 percentage point to 0.6%, while the forecast for fiscal 2026 (April 2026 to March 2027) was maintained at 0.7%.

The outlook for the consumer price index (excluding fresh food) for fiscal 2025 was raised by 0.5 percentage point to 2.7%, and the forecast for fiscal 2026 was increased by 0.1 percentage point to 1.8%. In addition, the BOJ projected real GDP growth for fiscal 2027 (April 2027 to March 2028) at 1.0% and the consumer price index increase at 2.0%.