19.03.202603:07:52UTC+00BoJ Holds Rates as Expected

The Bank of Japan kept its key short-term interest rate unchanged at 0.75% at its March 2026 meeting, maintaining borrowing costs at their highest level since September 1995. The decision, announced just hours after the U.S. Federal Reserve also left rates on hold, underscored a cautious stance among major central banks. As widely anticipated, the policy was approved by an 8–1 majority, with board member Hajime Takata dissenting in favor of a rate hike to 1%.

Policymakers reiterated that Japan’s economy is recovering at a moderate pace but cautioned that intensifying tensions in the Middle East are adding uncertainty to the outlook. The board indicated it remains prepared to continue raising rates and recalibrating monetary support if economic growth and inflation evolve broadly in line with its projections, emphasizing that real interest rates are still markedly low.

At the same time, officials expect CPI inflation to fall temporarily below the 2% target before coming under renewed upward pressure, driven in part by rising crude oil prices. The Bank stressed the importance of closely monitoring geopolitical developments, energy markets, and global economic conditions, given their potential to influence Japan’s growth trajectory and inflation dynamics.