Bank of Japan holds at 1.25%, but one of nine votes for a hike

What they decided. At its 29-30 October meeting the Bank of Japan's board kept the target for the overnight rate at around 1.25%. The vote was 8 to 1. Hajime Takata voted against and proposed 1.5%. In the bank's statement he argues underlying inflation has already reached the target, so the bank should move faster towards a neutral rate.

ETF sales. Since January 2026 the bank has been selling the stock funds it bought for years. The current pace is about 330 billion yen a year at book value. It decided unanimously to raise that to about 860 billion yen a year, roughly 0.1% of market trading value. At market prices that is about 2.46 trillion yen a year. The new pace starts in January 2027.

New forecasts. The board's median for core inflation (excluding fresh food): 2.5% in fiscal 2026, 2.6% in fiscal 2027 (2.4% in July) and 2.0% in fiscal 2028. Real GDP growth: 0.7% in fiscal 2026 and 0.7% in fiscal 2027. The bank says inflation risks are skewed to the upside and growth risks are broadly balanced.

One big caveat. The forecasts leave out a possible temporary cut in the consumption tax on food that parliament is debating. The bank estimates it would take about 1.3 percentage points off fiscal 2027 core inflation.

Why it matters to you. If the bank keeps hiking, the yen may strengthen and borrowing in yen gets more expensive. Unwinds of such trades have hit stocks and crypto worldwide before. That is our reading, not a forecast.

What we don't know. What Ueda says about December at his news conference. How markets take the faster ETF selling. Whether parliament passes the food tax cut.

Confirmed facts

• On 30 October 2026 the Bank of Japan decided to keep the overnight call rate at around 1.25% in an 8-1 vote.^[1][3]
• Hajime Takata voted against and proposed a target of around 1.5%; the proposal was defeated by a majority vote.^[1][3]
• The bank decided unanimously to sell ETFs at about 860 billion yen a year at book value, up from about 330 billion; about 0.1% of market trading value.^[1]
• At market value the new pace is about 2.46 trillion yen a year; the change takes effect in January 2027.^[1]
• Median core inflation forecasts: 2.5% for fiscal 2026, 2.6% for fiscal 2027 (2.4% in July), 2.0% for fiscal 2028.^[2]
• Median real GDP growth forecasts: 0.7% for fiscal 2026 and 0.7% for fiscal 2027.^[2]
• The bank sees inflation risks skewed to the upside and risks to economic activity as generally balanced.^[2]
• The forecasts exclude the food consumption tax cut under debate; the bank estimates it would lower fiscal 2027 core inflation by about 1.3 points.^[2]
• The statement came out at 12:02 Tokyo time (03:02 UTC); Ueda's news conference is at 3:30pm Tokyo time (06:30 UTC).^[1][3]

Implications

• ConfirmedJapan's rate is unchanged, but a vote for a hike and a higher inflation forecast keep another hike on the table.
• ConfirmedThe bank will shed its Japanese stock ETFs faster, though the pace stays small next to market trading.
• Our readingIf hikes continue, the yen may strengthen and trades funded in yen get more expensive.

Still unknown

• What Ueda says about a December hike.
• How Japanese stocks react to the faster ETF selling.
• Whether parliament passes the food tax cut.

Who it affects

Japan, World. People who follow the yen, central bank rates and global markets

Sources

1. Bank of Japan: Statement on Monetary Policy (October 30, 2026) October 30, 2026 · official
2. Bank of Japan: Outlook for Economic Activity and Prices (October 2026), The Bank's View October 30, 2026 · official
3. Investing.com (Reuters): BOJ keeps interest rates steady, signals further rate hikes October 30, 2026 · media