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The Bank of Japan is expected to keep interest rates unchanged this week; the market is watching for new forecast signals as yen weakness may prompt a rate hike in September.

The Bank of Japan is expected to keep interest rates unchanged this week; the market is watching for new forecast signals as yen weakness may prompt a rate hike in September.

智通财经智通财经2026/07/28 07:21
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  1. The Bank of Japan is expected to keep its policy interest rate unchanged at 1% when it concludes its two-day meeting on Friday. The bank had previously raised rates in June to a 31-year high, citing rising oil prices that could push the underlying inflation rate above the 2% target. Despite ongoing inflation concerns, the central bank’s commitment to further tightening its policy remains unchanged, and the market has fully priced in at least one more rate hike before the end of the year.
  2. Markets are closely watching the central bank's latest economic and inflation forecasts for clues on the timing and pace of future actions. Although the uncertainty in the Middle East has led to a renewed increase in crude oil prices, central bank policymakers believe the risk of a sharp downturn for Japan’s economy is low, and expect the government to ensure sufficient energy supplies by taking alternative shipping routes that bypass the Strait of Hormuz.
  3. The weak yen remains one of the main factors affecting prices, increasing the burden of energy costs and potentially pushing up import costs further. According to Barclays economists, if the yen depreciates significantly and currency intervention fails to stem the decline, the Bank of Japan may be forced to raise rates as early as September.
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