Bank of Japan holds rates unchanged as expected, signals inflation trend at 2%

The Bank of Japan (BOJ) kept its policy rate, the interest rate it sets for the economy, unchanged on 30 October 2026. The decision was announced at 02:30 UTC and matched market expectations. According to Bloomberg, the bank also signalled that underlying inflation in Japan has now reached its 2% goal, a first by that measure.

The decision

The BOJ left rates where they were at this meeting. Our economic calendar listed both the forecast and the previous level as "<1.25%", so the outcome was in line with the consensus. The sources available to us do not give details of the board vote.

The key messages

The main point reported by Bloomberg is the bank's view on prices. The BOJ indicated that its measure of underlying inflation, which strips out short-term swings, has arrived at the 2% target for the first time. This matters because the central bank has long said it wants inflation to settle sustainably around 2% before it changes its policy stance. Alongside the decision, the BOJ published two documents: a decision on a change in the pace of its sales of ETFs (exchange-traded funds) for October 2026, and an amendment to its basic principles for disposing of ETFs and J-REITs, which are listed real estate funds. The bank built up these holdings in past years to support markets.

Compared with expectations

The hold was widely expected, so the decision itself held no surprise. Bloomberg reports that the yen kept the gains it had made against the US dollar after the announcement. The message on inflation was the newer element for markets, since a central bank that sees prices at target tends to be watched closely for any change in tone on future rates.

Read alsoBank of England preview: Bank Rate forecast at 4.00%, up from 3.75%

What comes next

Traders will now look at how the yen and Japanese assets absorb the bank's view that underlying inflation has hit 2%. The details of the revised ETF sales pace are also worth following, as they show how the BOJ is unwinding its past asset purchases. We will cover any further statements from the bank as they are published.

Sources: Bank of Japan, Bloomberg.