BOJ kept the policy rate at 1.25% as expected; the board voted 8-1 with Takada
dissenting after proposing a short-term rate target of 1.5%, which was rejected.
The BOJ will accelerate ETF sales, raising the annual pace to 860 bln yen. It
lifted next year’s core inflation forecast to 2.6% (from 2.4%) and upgraded this
year’s GDP outlook to 0.7% (from 0.6%). Forward guidance: the BOJ said it will
continue to raise policy rates as warranted by economic activity, prices and
financial conditions and aims to keep underlying inflation anchored near the 2%
target. Officials flagged a shift from disinflation risk to potential inflation
overshoot; core inflation may remain within a target-consistent range. The BOJ
warned that if AI-related profits fail to scale with investment this could
create pullback pressure and affect asset prices, and said it will monitor
Middle East risks, the yen and AI demand. Governor Ueda said the economy should
grow modestly, is being supported by government measures and easy finance
conditions, and that the BOJ will assess rate-hike necessity at every meeting;
the bank does not plan to formally declare the inflation target achieved—any
official declaration is for the government to make.
