Bank of Japan Holds Rate at 1.25% as It Sees Inflation in Line With 2% Goal

The Bank of Japan (BOJ) held its policy rate at 1.25% Thursday, Oct. 29, ET (Friday, Oct. 30, in Japan), leaving it at its highest level since 1995. The bank said underlying inflation was “generally consistent” with its 2% target, the first time it has made that assessment since adopting the goal in 2013.

The board voted 8-1. Member Hajime Takata dissented, favoring an increase to 1.5%.

Japan’s core inflation reached 2.1% in September, its highest reading of 2026. Real wages rose 1.5% year over year in August, marking an eighth consecutive month of annual gains.

The BOJ raised its policy rate to 1.25% in September, in a 7-2 vote. The increase took effect Sept. 24.

Japanese rates can affect global markets through yen-funded carry trades. Investors borrow yen and use the funds to invest in assets with higher returns, connecting the cost of yen borrowing to markets that include crypto. The mechanism is explained in earlier coverage of yen-funded trades.