FX.co ★ BoJ Holds Rates as Expected

The Bank of Japan kept its key short-term interest rate unchanged at 0.75% at its April 2026 meeting, maintaining borrowing costs at their highest level since September 1995. The decision, widely expected by financial markets, passed by a 6–3 majority on the policy board. In its quarterly outlook report, the bank nudged up its FY2025 GDP growth forecast to 1.0% from 0.9%, citing support from a new trade agreement with the United States and Tokyo’s substantial fiscal stimulus package. By contrast, the FY2026 growth projection was lowered to 0.5% from 1.0%, as the ongoing conflict in the Middle East is seen weighing on corporate profits and eroding households’ real incomes via a deterioration in the terms of trade. At the same time, the core consumer inflation forecast for FY2026 was revised up to 2.8% from 1.9%, with higher crude oil prices expected to push up costs, particularly for energy and goods.