Bank of Japan Holds Rate at 0.75%, Raises CPI Forecast Amid Middle East Tensions

The Bank of Japan concluded its April 27–28 policy meeting with a 6-3 vote to maintain the short-term interest rate at 0.75%, resisting calls from three dissenting board members for an immediate hike to 1.0%. The BOJ cut its FY2026 GDP growth forecast to 0.5% (from 1.0%) while raising its core CPI outlook to 2.8% (from 1.9%), citing Middle East energy disruption risks. Deputy Governor Ryozo Himino confirmed that further rate hikes remained on the table pending geopolitical developments, with at least one board member signaling a June hike was 'quite possible.' The hawkish shift marked another milestone in Japan's exit from a three-decade deflationary era.