Bank of Japan Keeps Policy Rate at 0.5 Percent

(MENAFN) The Bank of Japan (BOJ) kept its benchmark interest rate steady at 0.5% on Friday, in line with market forecasts, as inflation in the country dropped to its lowest level since November 2024.

In its statement, the central bank noted that inflation expectations have risen "moderately" but core inflation, primarily driven by food price hikes, now stands between 2.5% and 3%. However, the BOJ anticipated the impact of soaring food prices—especially rice—to diminish in the near future.

The decision to maintain the rate was supported by a 7-2 majority vote, with the two dissenting members calling for an increase to 0.75%.

This marks the fifth consecutive meeting where the BOJ has kept rates unchanged. The last rate hike occurred in January this year, though the central bank has signaled that further increases could be possible, depending on future economic developments.

The move comes as Japan’s core inflation, which excludes fresh food prices, dipped to 2.7% in August, its lowest level in nearly a year. This marks a third consecutive monthly decline and aligns with market expectations.

Additionally, overall inflation (headline inflation) fell to 2.7% from 3.1% in July, while the "core-core" inflation, excluding both energy and fresh food, decreased slightly from 3.4% in July to 3.3%.

One of the most significant changes was seen in rice inflation, which fell sharply to 69.7% from 90.7% in July. While still historically high, this decline signals some relief amid the country’s ongoing cost-of-living challenges.

MENAFN21092025000045017169ID1110089171