July MPM Quick Comment (Before Governor’s Presser)

Research evidence excerpt

July MPM Quick Comment (Before Governor’s Presser)

Update

July 31, 2026 05:31 AM GMT

Morgan Stanley MUFG Securities Co., Ltd.MBoJ Watch | Japan Takeshi Yamaguchi

Chief Japan Economist

July MPM Quick Comment Takeshi.Yamaguchi@morganstanleymufg.comMasayuki Inui +81 3 6836-5404

Economist

Masayuki.Inui@morganstanleymufg.com +81 3 6836-5407

(Before Governor’s Presser)

Key Takeaways

Policy rate unchanged, as expected

Wording of the Outlook Report was hawkish

Upward revisions to the outlook and changes in the risk balance

Focus on whether Governor Ueda's press conference aligns with the Outlook

Report

Policy rate unchanged, as expected: The BoJ decided to keep the policy rate,

namely the uncollateralized overnight call rate, at around +1.0% by an 8-1 majority

vote. The decision to keep rates unchanged was in line with prior expectations and

contained no surprise. Board Member Hajime Takata proposed raising the policy rate

to 1.25%, arguing that the BoJ had entered “a new phase in which a nimble policy

response is required,” but his proposal was voted down by a majority. Board

Member Naoki Tamura, who had joined Takata in proposing a rate hike in April, did

not submit a rate hike proposal this time.

Wording of the Outlook Report was hawkish: While market interpretations may

be mixed given that hawkish expectations ahead of the meeting had risen

considerably, our overall impression is that the July Outlook Report was hawkish. In

the section on the conduct of monetary policy, we believe the BoJ made important

changes that suggest a more hawkish policy stance. Specifically, these include the

addition of references to expanding AI-related demand and exchange rate

developments, as well as renewed emphasis on the risk that the underlying inflation