BOJ: Hikes, Confidence In Realizing Outlook Firmer, Inflation Forecasts Higher

As widely expected the BoJ raised rates by 25bps, taking the policy rate to 0.50%. The board voted 8-1 in favour of the move, with board member Nakamura dissenting (voting against a hike). 

• The central bank also raised its inflation forecasts, which was also widely expected. For core ex fresh food it was raised to 2.4% from 1.9% for the 2025 fiscal year. For 2026 it was raised to 2% from the previous 1.9%. It also noted upside risks to the fiscal 2025 price outlook, although it noted this in the previous outlook.
• GDP forecast for the 2025 and 2026 fiscal years didn't shift.
• In terms of the commentary, the central bank said it would keep raising rate if the outlook is realized. It also noted that real rates remain significantly low. This coupled with economic growth risks evenly balanced, while inflation risks are tilted higher has left a somewhat hawkish impression after today's meeting outcome. The BoJ stated the certainty around realizing the outlook is also rising.
• Still, the BOJ stated that financial conditions will remain easy (i.e. they aren't at neutral yet), while also noting high uncertainties around the outlook.
• Focus now shifts to the BoJ press conference from Governor Ueda, which will cross in a a little over 2 and a half hours.