BOJ Holds Rates Amid Split Vote as Middle-East Oil Shock Fuels Inflation Concerns

On 28 April 2026 the BOJ kept its policy rate at 0.75 % after a 6-3 vote. Governor Kazuo Ueda announced the hold; three board members – Junko Nakagawa, Hajime Takata and Naoki Tamura – voted for a 25-bp hike to 1.0 %.

BOJ Holds at 0.75%, But 6–3 Split Puts June Rate Hike in PlayReutersBOJ expected to hold rates steady as Iran conflict complicates tightening pathBOJ Skips Rate Hike amid Middle East Tensions

Rising oil prices from the Iran-Israel war pushed Brent above $111 per barrel, prompting the BOJ to lift its fiscal-2026 core-CPI forecast to 2.8 % (from 1.9 %) and to warn that higher energy costs will raise household and corporate expenses. The bank also cut its fiscal-2026 real-GDP growth estimate to 0.5 % from 1.0 % and lowered the 2027 outlook to 0.7 %.

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The yen fell to ¥159.65 per dollar, keeping USD/JPY near the 160 level that has previously prompted intervention. Ten-year JGB yields steadied at 2.468 %, while the S&P 500 slipped 0.75 % and gold fell 2.3 %.

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The BOJ said it will continue raising the policy rate, lifted the fiscal-2026 core-CPI forecast to 2.8 %, revised real-GDP growth to 0.5 % and warned higher oil prices will raise energy and goods costs, affecting households and corporate profits.

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• “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.

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• “It's not a meeting where rates policy is on the front burner, but the ?FOMC assessment of the economy may improve,” — Steve Englander, Standard Chartered.

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• “The hold itself was as expected, but the 6-3 vote split (vs 8-1 in March) and the rewritten forward guidance flagging the Bank” — Reuters analyst.

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• “With spring wage talks likely to deliver pay rises on par with last year, the wage-price cycle points to higher inflation ahead.” — Market strategist.

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ING warned the BOJ cannot save the yen and that a 25-bp hike would still leave real rates negative. Some analysts call the hold a modest ‘hawkish hold’ that may support the yen, while others see the split vote as internal debate without market impact.

"The Bank of Japan can't save the yen"

Analysts differ on the BOJ’s stance: some label the decision ‘hawkish’, others a ‘pause’. Inflation forecasts diverge, with core-CPI raised to 2.8 % but core-core CPI falling to 2.4 %. The yen’s path remains uncertain amid mixed expectations of a June hike.

BOJ Holds at 0.75%, But 6–3 Split Puts June Rate Hike in Play

The BOJ’s mid-June meeting will test a move to 1.0 %. Markets will watch Governor Ueda’s press conference for clues on balancing inflation-driven tightening against growth risks from the Middle-East conflict. Policy decisions in the U.S., Europe and the U.K. will also shape the yen and global carry-trade.

Reuters