"Japan Seen Holding Policy Rate This Month… Economic Growth Forecasts Likely to Be Revised Up"

The Bank of Japan (BOJ) is expected to keep its policy rate unchanged this month.

According to Bloomberg on the 9th (Korea time), a BOJ official said, "At the Monetary Policy Meeting scheduled for the 22nd–23rd, the Bank of Japan is likely to revise up its economic growth forecasts, and the policy rate is expected to be left unchanged."

The BOJ is set to release its quarterly Outlook for Economic Activity and Prices on the 23rd. The BOJ is said to be considering raising its forecast for fiscal 2026 (starting April 2026) growth from the current 0.7%. There is also speculation that the growth outlook for the current fiscal year could be revised higher.

These expectations reflect the impact of Prime Minister Sanae Takaichi’s large-scale stimulus package, which passed the Diet last month. The package includes ¥17.7 trillion (about $113 billion) in fiscal spending to support economic activity and address prices.

The BOJ raised its policy rate to 0.75% last month, the highest level since 1995. The official added that this meeting is expected to focus on reviewing recent policy effects and economic conditions rather than pursuing an additional rate hike.