JPY: BOJ continues to see inflation risks as skewed to the upside

Research evidence excerpt

JPY: BOJ continues to see inflation risks as skewed to the upside

Global Markets Research

31 July 2026First Insights

Foreign Exchange - Global

Research AnalystsJPY: BOJ continues to see inflation risks as

Japan Economicsskewed to the upside

Kyohei Morita - NSC

• BOJ’s policy decision: The BOJ decided to keep the policy rate intact at “around kyohei.morita@nomura.com

1.0%”, as widely expected. Board member Hajime Takata dissented, suggesting +81 3 6703 1395

instead a rate hike. Japan FX Strategy

Yujiro Goto - NSC • BOJ’s Outlook Report: The report newly noted that there is a risk that underlying CPI

yujiro.goto@nomura.com

inflation will “deviate upward to a level above the price stability target of 2 percent”. +81 3 6703 1120

This risk, however, had already been noted by Deputy Governor Uchida in the

previous post-MPM press conference in June.

• FX strategy: The BOJ’s policy hold was widely expected, and the possibility of further

intervention to curb JPY weakness is the near-term focus. That said, it will be important to

see whether expectations that the September meeting will remain “live” are maintained

following Governor Ueda’s press conference.

BOJ’s MPM: Policy rate left intact at “around 1.0%” with one dissenter

The BOJ decided to leave the policy rate at “around 1.0%” on 31 July, as widely expected,

by a 8-1 majority vote.

Board member Hajime Takata dissented, advocating instead a rate hike to ‘around

1.25%’. Takata dissented, saying the situation had shifted to “a new phase in which the

Bank needs to adopt a nimble approach in response to upside risks to prices

caused by demand shocks stemming from overseas developments and to changes

in overseas financial conditions”.

BOJ’s Outlook Report: GDP and CPI outlook left virtually intact, while upside risks