---
title: Bank of Japan ) keeps rates unchanged at 1% However, it warned that core inflation was likely to exceed its 2% target from September.
description: "The move comes as Japan reportedly conducted an intervention to strengthen the yen on Thursday night.\n\n• The Bank of Japan kept its policy rate unchanged at 1% in an 8-1 vote on Friday, in line with market expectations, after raising rates to their highest level since 1995 last month.\n\n• Board member Naoki Takata dissented, calling for an immediate 25-basis-point hike, citing upside inflation risks and changing global financial conditions.\n\n• The BOJ said it will continue to raise rates if economic activity, inflation and financial conditions evolve as expected, adding that underlying inflation is now close to its 2% target.\n\n• In its latest outlook, the central bank lowered its FY2026 core CPI forecast to 2.5% from 2.8% and raised its FY2026 GDP growth forecast to 0.6% from 0.5%. FY2027 GDP growth forecast is raised to 0.8% from 0.7%\n🏦BoJ Says: Significant downside risks to economy activity & significant upside risks to prices have decreased.\n\nIn its outlook, the BOJ said that core inflation was likely to accelerate to a level “clearly above” 2% from the second half of its 2026 fiscal year, which runs from September to March.\n\nIt cited wage increases being passed along into selling prices, the rise in crude oil prices and the recent depreciation of the yen. Inflation should then come down toward 2% as crude oil prices decline, it said.\n\nJapan’s core inflation for July came in at 1.6%, and has been below 2% for most of 2026.\n\nThe decision comes as Tokyo reportedly conducted an intervention on Thursday night, in conjunction with U.S. authorities executing a “rate check,” a move usually seen as a precursor to intervention.\n\nPeter Schiff: \"The BoJ’s decision to hold rates at 1%, with only the possibility of a quarter-point hike by year-end, ensures a weaker yen, rising inflation, and higher long-term interest rates, ultimately forcing the BoJ to hike much more in the future, with even more adverse consequences\".\n\nSource: Augur Infinity"
---

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# [Bank of Japan ) keeps rates unchanged at 1% However, it warned that core inflation was likely to exceed its 2% target from September.](https://blog.syzgroup.com/syz-the-moment/bank-of-japan-keeps-rates-unchanged-at-1-however-it-warned-that-core-inflation-was-likely-to-exceed-its-2-target-from-september)

 Written by [Charles-Henry Monchau, CFA, CMT, CAIA](https://blog.syzgroup.com/syz-the-moment/author/charles-henry-monchau) | Jul 31, 2026, 3:34:12 PM

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