BOJ sharply ups FY 2026 inflation outlook on oil prices, signals rate hike

TOKYO - The Bank of Japan on Tuesday kept its key interest rate unchanged at around 0.75 percent as it assesses the impact of the Middle East conflict, but sharply raised its inflation outlook for the current fiscal year, reinforcing expectations of a rate hike in the near future.

After the bank decided to stand pad for the third straight meeting, as widely expected, BOJ Governor Kazuo Ueda highlighted the risks of inflation due to surges in crude oil price that could broadly affect products and services in resource-poor Japan, signaling that a rate hike could be on the table as early as the next meeting in June.