Japan’s central bank on Friday raised economic growth forecasts while holding its key policy rate at 0.75% as the country prepares to go into an election.
The Bank of Japan upgraded its economic growth forecast for the fiscal year ending in March 2026 to 0.9% from 0.7% in October 2025, and also raised its GDP expansion outlook for the 2026 fiscal year to 1% from 0.7%.
The central bank kept the benchmark interest rate steady in a split 8-1 decision, after raising it to the highest level in 30 years in December, ahead of snap polls that could see Prime Minister Sanae Takaichi sharpen her advocacy for monetary easing and fiscal support.
In its statement, the BOJ revealed that board member Hajime Takata had proposed raising rates to 1%, saying that risks to prices in Japan were skewed to the upside.
Japan’s December inflation data, released earlier in the day, showed headline price growth coming in at 2.1%, its lowest since March 2022, but still running above the BOJ’s target of 2% for a 45th straight month.
