Story perspectives

BOJ Holds 1% Rate as CPI Hits Low, PM Approval Slides

7/28/2026

Summary

BOJ Keeps Rate

The Bank of Japan will keep its policy rate at 1% at the meeting ending Friday, preserving room for future hikes.
June core CPI rose 2.7% YoY and core-core CPI 2.0% YoY, the lowest readings since July 2024.
Analysts expect the BOJ to raise rates to 1.25% by December 2026, possibly as early as October, after a Tankan survey showed record corporate inflation expectations.

Summary

Takaichi Approval Drops

Prime Minister Sanae Takaichi’s approval rating fell to 57 percent in a Yomiuri poll July 24-26, down from 69 percent in June.
Disapproval of her handling of rising living costs rose to 34 percent, while 71 percent now disapprove of her cost-cutting efforts, up from 56 percent.
Opposition within the Liberal Democratic Party, market pressure and a reported possible cabinet reshuffle in August or September have stalled her promised 8 percent food-levy cut.

History

Historical Context

In 1998 the Bank of Japan cut its policy rate to 0% after the Asian financial crisis, producing the first annual CPI decline (-0.5%) since 1970. The shift anticipates hikes, with the BOJ at 1% under Prime Minister Sanae Takaichi, whose LDP holds 57% support. The 1985 launch of the yen uncollateralized overnight call market led to the 2016 adoption of the TONA rate.

1 of 3

BOJ Keeps Rate

The Bank of Japan will keep its policy rate at 1% at the meeting ending Friday, preserving room for future hikes.
June core CPI rose 2.7% YoY and core-core CPI 2.0% YoY, the lowest readings since July 2024.
Analysts expect the BOJ to raise rates to 1.25% by December 2026, possibly as early as October, after a Tankan survey showed record corporate inflation expectations.

1 / 3