BoJ keeps rates unchanged at 1.00%, as expected, through 8-1 vote, while it stated that it will consider the timing and pace of rate hikes while examining the likelihood of realising baseline scenario risks, with eye on impact of Middle East developments

• Will continue to raise interest rates in response to economic and price developments, as well as financial conditions.
• Will conduct monetary policy as appropriate from the perspective of sustainably and stably achieving the inflation target.
• Takata dissented and proposed a 25bps hike, which was turned down by a majority vote.
• Underlying inflation is likely to reach level consistent with price target between second half of fiscal 2026 and fiscal 2027
• Risks to prices are skewed to the upside.
• Risks to economic outlook are evenly balanced.
• Exports and output likely to increase moderately.
• Recent rally in yen is likely to lead to an increase in prices mainly of durable goods.
• The mechanism which wages and price rises moderately in interaction with each other will be maintained.
• Underlying inflation has been approaching 2%.
• Financial conditions have been accommodative.

• Fiscal 2026 median forecast at 0.6% (prev. 0.5%)
• Fiscal 2027 median forecast at 0.8% (prev. 0.7%)
• Fiscal 2028 median forecast at 0.8% (prev. 0.8%)

• Fiscal 2026 median forecast at 2.5% (prev. 2.8%)
• Fiscal 2027 median forecast at 2.4% (prev. 2.3%)
• Fiscal 2028 median forecast at 2.0% (prev. 2.0%)

Holds accompanied by dissents in favour of a hike have historically been the BoJ's way of moving without moving: the lone dissent, here Takata proposing 25bp, tends to precede the actual move by a meeting or two rather than mark a sustained internal split, and the board's centre of gravity is what matters. The statement keeps the conditional tightening language intact while adding Middle East developments as an explicit watch item, a formulation that in past episodes has served as cover for patience when energy-driven price risks cut both ways for Japan, raising import costs while threatening external demand. The forecast revisions point the same way: near-term core CPI marked down even as the following year edges up and the bank reiterates underlying inflation converging on target over the medium term, which is the profile of a bank deferring rather than abandoning normalisation. The note that the yen's rally feeds into durable goods prices is the channel to watch, since currency pass-through has been the swing factor in the bank's past inflation assessments and a stronger yen has historically done some of the tightening work for it. The follow-ons are the governor's press conference for any colour on timing conditions, subsequent board member commentary for whether the dissent broadens, and the wage and services inflation prints that the baseline scenario rests on.