BOJ Holds Rate at 1.25%, Cites Reaching 2% Inflation Target and Accelerates ETF Sales

The Bank of Japan kept its benchmark rate at a 31-year high of 1.25% in an 8-1 vote, while officially declaring underlying inflation has reached its 2% target for the first time since 2013. Board member Hajime Takata dissented, voting for an immediate hike to 1.50%. The central bank upgraded its fiscal 2027 core inflation projection to 2.6% from 2.4% and unanimously voted to accelerate annual ETF sales from 330 billion yen to 860 billion yen starting January 2027. Following the hawkish hold, the yen strengthened toward 157 per dollar.