Bank of Japan keeps policy rate constant

The Bank of Japan has kept its policy interest rate constant at 0.75% on Tuesday, in line with market expectations.

In a statement, the bank said Japan's economic growth is likely to decelerate in fiscal 2026, since the rise in crude oil prices reflecting the impact of the situation in the Middle East is expected to push down corporate profits and households' real income.

"However, the economy is expected to continue growing moderately, albeit at a decelerated rate, since it is likely to be underpinned by factors such as the government's various measures and accommodative financial conditions, in addition to developments such as continued high levels of profits in the corporate sector," the bank added.

The bank increased its inflation forecast to 2.5-3% range for the fiscal year of 2026 due to higher energy prices.

The rate was 0.5% during 2025 before the bank increased by 25 basis points in December 2025.

During the last three meetings, the bank has been keeping the rate unchanged.