Full Breakdown
Bank of Japan Holds Policy Rate at 0.75% Amid Iran War-Driven Inflation Risks
4/28/2026, 8:26:00 PM
Decision and Inflation Outlook
On 28 April 2026 the Bank of Japan (BOJ) held its policy rate at 0.75 % after a 6-3 board vote, the widest split since 2016. It raised its core-inflation forecast for fiscal 2026 to 2.8 % (up from 1.9 %) and its core-core estimate to 2.6 % for FY 2026-27, while cutting the FY 2026 growth outlook to 0.5 %.
Context and Market Reaction
The decision came as the Iran war lifted crude-oil prices, raising Japan’s import bill and straining terms-of-trade. Post-announcement the yen hovered near 159.65 per dollar, the 10-year JGB yield stayed around 2.47 %, the Nikkei 225 slipped more than 1 %, and Brent crude reached $111.47 / bbl.
Key Decision-Makers
Governor Kazuo Ueda led the meeting. Dissenters Junko Nakagawa, Hajime Takata and Naoki Tamura voted for a 1 % rate, citing upside-skewed price risks. Finance Minister Satsuki Katayama said the government stands ready to intervene if yen weakness deepens. Economists Fred Neumann (HSBC) and Eugene Epstein (Moneycorp) commented.
Official Statements
The BOJ warned that higher crude-oil prices will lift energy and goods costs and that “companies may more actively pass on rising costs for oil-related goods.” Governor Ueda said “underlying inflation is approaching 2 %” and pledged to “carefully gauge data to stay ahead of the curve.” Finance Minister Katayama reiterated readiness to act against excessive yen falls.
Criticism & Opposition
The three dissenters urged a 1 % rate to pre-empt higher inflation. HSBC’s Neumann noted “the three dissenting votes highlight the tensions monetary officials face,” while other analysts warned a stagflationary shock could erode real GDP growth.
Conflicting Figures & Gaps
Sources differ on inflation: core-core is 2.6 % while core CPI is 2.8 %. Yen levels are reported as 159.65 or 159.12 per dollar. FY 2027 growth forecasts range from 0.5 % to 0.7 %. Wage-price data remain scarce.
Verbatim Quotes
- “The rise in crude oil prices is expected to push up prices, mainly of energy and goods, with moves to pass on wage increases to selling prices continuing,” — Bank of Japan
- “We’re having the traditional risk-off correlations since the Iran war — a rise in oil prices, a stronger dollar, higher U.S. yields, lower Fed rate cut expectations, and lower gold,” — Eugene Epstein, Moneycorp
- “While the BOJ kept rates on hold, the three dissenting votes highlight the tensions monetary officials face,” — Fred Neumann, HSBC
- “Finance MinisterSatsuki Katayamasaid on Tuesday the government was ready to take action against foreign exchange volatility, reiterating Tokyo's resolve to intervene in the market to counter excessive yen falls.” — Finance Ministry statement
Outlook for June Meeting
The BOJ indicated that its June policy meeting will assess whether inflation stays above target, wage negotiations deliver 5 %+ growth, and oil prices remain elevated. If those conditions hold, analysts expect a hike to 1 %; otherwise the bank may hold again and monitor yen movements for possible intervention.
