Japan Economic Perspectives: BoJ preview: On hold as widely expected

Research evidence excerpt

Japan Economic Perspectives: BoJ preview: On hold as widely expected

Global Research

22 July 2026ab

Japan Economic Perspectives Economics

JapanBoJ preview: On hold as widely expected

Go Kurihara

Associate Economist

Policy rate on hold, but will the reflation camp make waves? go.kurihara@ubs.com

+81-3-5293 3000

We expect no major policy changes at the July 30-31 Monetary Policy Meeting. Not

much time has passed since its rate hike from 0.75% to 1.0% last month, and media

reports have also pointed to a hold. That said, the composition of the Policy Board will

become slightly more dovish as Sato, viewed as a reflationist, replaces Nakagawa, who

took a hawkish stance at the April meeting. We expect the Board to leave rates

unchanged with near-unanimous support, although Takata could propose another hike.

The key focus will be whether reflationist voices gain influence. Beyond policy-rate

decisions, the Board also votes on its baseline assessment of the economic and inflation

outlook. While precedents are limited, members can support keeping rates unchanged

while dissenting on the wording of the statement or the outlook assessment.

GDP outlook likely revised up; inflation forecasts slightly higher

The July meeting will include updated Board members’ economic and inflation forecasts.

Supported by resilient economic activity, we expect FY2026 GDP growth to be revised up

to 0.7% from 0.5%, and FY2027 growth to 0.8% from 0.7% (Figure 1). Inflation

forecasts are likely to see only modest revisions. The BoJ’s oil-price assumptions, based

on futures curves, probably have changed little from April with a recent spike in spot

crude prices (Figure 4). However, the yen has weakened from around 159.6 per dollar at