BOJ holds 1.25% rate while accelerating ETF sales as inflation stays elevated
The Bank of Japan held its policy rate at 1.25% but voted to accelerate ETF sales from ¥330 billion to ¥860 billion a year from January 2027, while its outlook kept inflation above target in fiscal 2026 and 2027.
The Bank of Japan kept its uncollateralized overnight call-rate target at around 1.25% at its October 30 meeting, with the decision passing by an 8–1 vote. Board member Hajime Takata dissented in favor of a 1.5% rate, saying the Bank should move closer to the neutral rate while underlying consumer-price inflation has reached the price-stability target.
The BOJ said its ETF sales, which began in January 2026, had proceeded smoothly without a major market impact as stock-market trading values expanded. At the new book-value pace, it estimates that disposing of its ETF holdings would take about 43 years, versus about 112 years at the previous pace. Sales can still be temporarily adjusted or suspended if market conditions require it.
The October outlook put median real-GDP growth at 0.7% in fiscal 2026 and 0.7% in fiscal 2027. Median CPI inflation excluding fresh food was projected at 2.5% and 2.6%, respectively, keeping price growth above the BOJ’s 2% target through the forecast period. The combination leaves the policy path sensitive to the persistence of inflation and the effect of energy prices on household purchasing power.
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