PREVIEW: BoJ Rate Decision Scheduled for Friday 30th October 2026 anytime after 02:30GMT/22:30EDT

• BoJ is expected to keep rates unchanged at 1.25% on Friday.
• BoJ just hiked rates at the last meeting in September.
• Focus will turn to the language on where it stands regarding reaching the inflation target and the latest Outlook Report.

OVERVIEW: The Bank of Japan is expected to keep rates unchanged at 1.25% when it concludes its 2-day policy meeting on Friday, given that the BoJ just lifted rates at the last meeting in September, with money markets pricing around a 98% likelihood for the BoJ to stand pat at this meeting, although a majority of economists surveyed by Reuters anticipate another hike in December. Furthermore, the central bank will also release its latest Outlook Report containing board members’ median forecasts for Real GDP and Core CPI.

BOJ HAD JUST HIKED RATES LAST MONTH: BoJ increased rates by 25bps at last month’s meeting to lift the short-term rate to 1.25%, which was widely expected, while the vote was not unanimous as board members Asada and Sato (Takaichi-appointed members) dissented, while the central bank's language continued to signal future rate increases, but with no major signals of urgency as it noted that it will continue to raise rates in response to economic and price developments as well as financial conditions and will consider the timing and pace of rate hikes while examining the likelihood of realising the baseline scenario and risks. BoJ also reiterated it will conduct monetary policy as appropriate from the perspective of sustainably and stably achieving the inflation target and noted that the accommodative financial environment will be sustained after the policy rate change, thereby supporting economic activity. In terms of the dissenters, Asada considered that with the rate of increase in the CPI (all items less fresh food) below 2% recently, it could not necessarily be said that the economic situation was strong and it was desirable for the Bank to maintain the guideline for money market operations, while Sato considered that current economic and price developments did not appear to have substantially accelerated compared with before.

RHETORIC FROM OFFICIALS CONTINUES TO POINT TO FUTURE RATES HIKES: The recent language from officials continues to point to further hikes, as BoJ Governor Ueda said underlying inflation is approaching 2% and the BoJ will continue to raise the policy rate in accordance with economic, price and financial developments, while he acknowledged there is a risk of underlying inflation overshooting the 2% price target. Ueda separately stated that Japan is experiencing a positive cycle of rising wages and recovering prices, as well as noted that anchoring core inflation near 2% is becoming increasingly important. BoJ's Himino also said upside inflation risks remain high and warned that delays in adjusting monetary policy could allow inflation risks to materialise and harm the economy, while Sato agrees on the need for gradual adjustment to interest rates and does not think there should be a pre-set pace of rate hikes. Furthermore, Board Member Koeda believes that the bank should adjust the policy interest rate in a timely manner with an eye on the economic and price situation, while keeping in mind the estimated range of the neutral interest rate, and stated that given that there have been considerable upside risks to prices in addition to continued accommodative and financial conditions, the bank should not become overly cautious about raising the policy interest rate.

SOURCE REPORTS AND DATA POINTED TO FUTURE HIKES BUT NOT IMMEDIATELY: There have been several reports that suggest more hikes to come, but not immediately, with sources noting the BoJ is expected to continue rapid rate hikes, with focus on December, as interest rates are still far from neutral and inflation needs to stabilise, while sources cited by Bloomberg stated the BoJ is to lean back against back-to-back hikes in October, but could adjust its language on the 2% inflation target that had previously been described as "approaching 2%", to approximately 2%. There were also separate reports that the BoJ is likely to hold in October but could signal a December hike and may slightly raise its FY27 inflation forecast, while Kyodo reported the BoJ is expected to assess whether underlying inflation has reached 2% at the October meeting and hold rates at around 1.25%. In terms of the data, the latest National CPI figures for September showed an acceleration with Headline and Core CPI Y/Y rising to 2.1%, as expected, to top the central bank’s target for the first time in 9 months, while the recent quarterly Tankan survey showed sentiment among Large Manufacturers improved but missed forecasts and was an overall weaker-than-expected Tankan survey.

ANNOUNCEMENT: The announcement is due on Friday with no exact scheduled release time, but tends to be anytime after the start of the Tokyo lunch break, which begins at 02:30GMT/22:30EDT. As a pause in rates is widely seen as a forgone conclusion, the attention will turn to the central bank’s language for clues on policy and if it describes inflation as having approximately reached its target, while market participants will also get to digest the latest forecasts in the Outlook Report as upward adjustments could be seen to further add to the case for future hikes.

• Fiscal 2026 median forecast at 0.6%.
• Fiscal 2027 median forecast at 0.8%.
• Fiscal 2028 median forecast at 0.8%.

• Fiscal 2026 median forecast at 2.5%.
• Fiscal 2027 median forecast at 2.4%.
• Fiscal 2028 median forecast at 2.0%.

Pauses immediately after a hike are the established rhythm of this tightening cycle, and in past BoJ episodes of this kind the decision itself has been a non-event while the Statement and Outlook Report carried the signal. The operative distinction is between the hold, which is fully priced, and the language on the inflation target: a shift in characterisation from 'approaching' to 'approximately at' 2% would be read as the formal precondition for the next move and has historically steepened expectations for the following meeting rather than this one. The prior meeting's dissents matter as structure, not surprise: two board members arguing the hold case marks the dovish tail, and whether that dissent count holds, shrinks, or flips toward the hawks is the usual tell for timing. The Outlook Report's core CPI medians for the out-years are the second channel, since upward revisions to forecasts already sitting at or above target have tended to pre-commit the bank more than any single phrase in the statement. Follow-ons are the Governor's press conference tone on underlying inflation and wages, the vote split, and how the December path is framed, with JPY and the front end of the JGB curve typically trading the language and forecasts rather than the rate outcome itself.