The Bank of Japan kept rates unchanged at 0.5% in its July 2025 meeting, in line with expectations. The “Statement on Monetary Policy” was short, noting that the BoJ policymakers decided unanimously to “encourage the uncollateralized overnight call rate to remain at around 0.5%.”

The Bank of Japan (BoJ) maintained its cautious outlook in July 2025, projecting slower near-term growth and easing inflation but affirming that underlying price pressures should rise gradually as labor shortages intensify.

• Real GDP is projected to grow +0.6% in FY2025, +0.7% in FY2026, and +1.0% in FY2027, broadly unchanged from April forecasts.
• CPI (excluding fresh food) is forecast at +2.7% YoY in FY2025 (revised up from +2.2%), then moderating to +1.8% in FY2026 and holding around +2.0% in FY2027.
• Core CPI (ex. fresh food and energy) is expected at +2.8% in FY2025, slowing to +1.9% in FY2026 before returning to +2.0% in FY2027.
• Current CPI inflation is running at 3.0–3.5% YoY, driven by rising food prices (especially rice) and wage pass-through.
• The BoJ sees downside risks to growth in FY2025–26 due to global trade policy uncertainty but views inflation risks as balanced. Policy rate hikes remain likely if the baseline outlook is achieved.