The Bank of Japan published the transcript of Governor Ueda’s Oct. 30 press conference, explaining a shift in policy emphasis from raising underlying inflation toward 2% to stabilizing it around that level. The meeting maintained the uncollateralized overnight call rate target at about 1.25% and approved faster sales of exchange traded funds (ETFs) from January 2027. Further interest rate increases remain conditional on economic, price and financial developments. All nine board members judged underlying inflation broadly consistent with the 2% target, but sustainable and stable achievement still requires confirmation. The assessment will focus particularly on whether inflation expectations remain anchored around 2% and wage and price setting are consistent with that rate. Financial conditions remain accommodative, while inflation risks are tilted upward. Consumer inflation excluding fresh food is expected to rise clearly above 2% before easing toward that level, reflecting higher energy and semiconductor prices and earlier yen depreciation. The fiscal 2027 inflation outlook was revised somewhat upward. The rate hold allows more time to assess risks and financial conditions, including the cumulative effects of earlier increases. A proposal to raise the rate to about 1.5% was rejected. Future decisions will include the next meeting, without a predetermined pace of increases. Annual ETF sales will rise to about JPY 860 billion at book value, targeting 0.1% of total market trading value rather than the previous 0.05% assumption. Higher market turnover had pushed actual sales below the intended share, prompting a review of sales experience since January 2026 and earlier equity disposals. Sales may still be temporarily adjusted or suspended depending on market conditions. Annual sales of Japanese real estate investment trusts remain unchanged at about JPY 5 billion at book value.
Bank of Japan outlines 1.25% rate hold and faster ETF sales as underlying inflation aligns with 2% target
In its published transcript of Governor Ueda’s Oct. 30 press conference, the Bank of Japan explained its 1.25% rate hold and unanimous assessment that underlying inflation is broadly consistent with the 2% target. Further rate increases will depend on economic and financial conditions, with policy now focused on keeping underlying inflation near 2% rather than lifting it toward that level. From January 2027, annual ETF sales will increase to about JPY 860 billion at book value, targeting 0.1% of market trading value.