Bank of Japan — Monetary Policy Meeting

Decision (Sept 2025)

• Policy rate held steady at 0.50%.
• Decision was unanimous among board members.
• Tone: BOJ stressed prudence — inflation running above target in parts, but underlying inflation not fully sustained.

Inflation & Outlook

• Core CPI forecast raised to ~2.7% (from ~2.2%).
• Underlying inflation still somewhat below target but trending toward goal.
• Growth outlook: domestic growth moderating due to trade/policy headwinds, but expected to improve as external pressures ease.
• Risks: tariffs, food price inflation, FX volatility highlighted as downside risks.

Analyst / Market Views

• Stance: cautious-hawkish — upgraded forecasts hint readiness to tighten if conditions persist.
• Path: markets expect possible rate hikes if core inflation and wages strengthen; timing uncertain.
• Pricing: yen strengthened modestly; bond yields edged higher; at least one hike priced in coming months.

Trader Takeaways

• Hawkish tilt, but highly data-dependent.
• Watch: core inflation, food/energy prices, wage growth, FX moves, tariff impacts.
• Risk balance: upside from tariffs and food inflation; downside from weak consumption and external shocks.

Next Meeting

• Sept 18–19, 2025.
• Consensus: likely hold, but possibility of modest tightening if inflation/wages surprise to the upside.