BOJ Holds Steady Amid Global Economic Concerns

The Bank of Japan kept interest rates unchanged, highlighting global economic risks and Japan's fragile economic recovery. Despite maintaining a cautious stance, it projected inflation near its 2% target. Analysts anticipate potential future rate hikes, contingent on domestic political stability and international economic dynamics.

In a decision closely watched by economists worldwide, the Bank of Japan (BOJ) held its ultra-low interest rates steady on Thursday. The bank emphasized the need to scrutinize global economic developments, focusing on risks to Japan's fragile recovery as it considers future policy adjustments.

According to its quarterly outlook report, the BOJ is particularly attentive to trends in overseas economies, especially the U.S., which could impact Japan's economic activity and price outlook. Notably, the central bank anticipates inflation to hover near its 2% target in the coming years, demonstrating a measured resolve to raise borrowing costs if economic conditions align with forecasts.

Despite cutting its core consumer inflation forecast for fiscal 2025 to 1.9%, the bank maintained its 2026 forecast. Analysts point to domestic political uncertainties and the upcoming U.S. presidential election as factors that could delay any policy shifts. Market attention now turns to BOJ Governor Kazuo Ueda's forthcoming briefing for further insights into the bank's strategic direction.

(With inputs from agencies.)