--The Bank of Japan's nine-member board voted unanimously to maintain the target for the overnight interest rate at 0.5% for the fourth straight meeting after hiking it by 25 basis points (0.25 percentage point) in January amid uncertainty over trade rows.
--The bank will continue raising rates if growth and inflation evolve in line with its medium-term outlook but it is still in the process of normalizing its monetary policy stance from years of keeping short-term rates near zero percent.
--In its quarterly Outlook Report, the board left its growth forecasts little changed for fiscal years 2025, 2026 and 2027 (ending in March 2028) while revising up its inflation outlook sharply for the current fiscal year and seeing tame price rises in fiscal 2025 and 2026 as projected in the April report.
--The BOJ also noted that risks to its GDP outlook is skewed to the downside, as predicted in April, but said risks to its CPI projection is generally balanced, compared to the April statement that it was skewed to the downside.
--The BOJ continues to expect Japan's economy will settle around 2% inflation. In the second half of the projection period (fiscal 2025 through fiscal 2027), underlying CPI inflation is likely to be at a level that is generally consistent with the price stability target, it said, repeating its previous report issued on May 1.

The median projections by the board from its quarterly Outlook Report:
FY25 core CPI (ex-fresh food) +2.7% vs. +2.2% in May
FY26 core CPI (ex-fresh food) +1.8% vs. +1.7% in May
FY27 core CPI (ex-fresh food) +2.0% vs. +1.9% in May
FY25 GDP +0.6% vs. +0.5% in May
FY26 GDP +0.7% vs. +0.7% in May
FY27 GDP +1.0% vs. +1.0% in May

--The board repeated that Japan's economic growth is likely to moderate as trade and other policies lead to a slowdown in overseas economies and to a decline in domestic corporate profits despite support from accommodative financial conditions. Thereafter, Japan's economic growth rate is likely to rise, with overseas economies returning to a moderate growth path, it said.
--Board members warned that there are various risks to their outlook. In particular, it remains highly uncertain how trade and other policies in each jurisdiction will evolve and how overseas economic activity and prices will react to them, the BOJ said. It is therefore necessary to pay due attention to the impact of these developments on financial and foreign exchange markets and on Japan's economic activity and prices.

--The Bank of Japan’s nine-member board is widely expected to vote unanimously to maintain the target for the overnight interest rate at 0.5% for the fourth straight meeting amid uncertainty over the trade war and geopolitical risks. Tokyo and Washington agreed on 15% tariffs on most U.S. imports of Japanese goods (50% on iron and steel), lower than President Trump’s original plan to slap 25% duties on Japan, but the figure is still much higher than the 2.5% rate imposed by the United States before the second Trump administration.
--No change in the bank’s policy stance would follow the previous meeting on April 30-May 1 when the board decided in an 8 to 1 vote to moderate the JGB purchase reduction pace to by about ¥200 billion a quarter in fiscal 2026 starting in April from by about ¥400 billion now, which will still reduce the pace of its JGB buying to around ¥2.1 trillion in January-March 2027 from about ¥4.1 trillion in January-March 2027.
--Governor Kazuo Ueda is expected to repeat that the bank will continue raising rates “gradually” as part of its policy normalization process that began in March 2024.

The Bank of Japan is the central bank of Japan. The Bank of Japan Act states that the bank's monetary policy should be aimed at"achieving price stability, thereby contributing to the sound development of the national economy." The nine-member policy board reviews economic conditions at home and abroad before making a policy decision. There is no specific time for the announcement. The board holds eight two-day Monetary Policy Meetings a year, in January, March, April, June, July, September, October and December. At each meeting, the board votes on the proposals on the bank’s monetary policy stance and the basic guideline on how to achieve the policy target submitted by the chair of the board, who is the bank governor.

The announcement of the bank’s monetary policy decision after each meeting can cause a market reaction, even when there is no change to the policy stance. Markets tend to look ahead toward a policy shift, pricing in a change to the bank’s targets for overnight and long-term interest rates, the pace of financial asset purchases or the scale of market operations.

Market participants closely monitor the news conference by the BoJ governor that usually starts at 1530 JST (0130 EST/0230 EDT/0630 GMT), a few hours after the bank releases its policy decision. Comments from the governor could provide clues to what the bank may or may not do in the near term, which in turn could trigger buying or selling of the yen against the dollar.

Since April 2023, the bank has been conducting a"broad-perspective review" of the costs and benefits of its various monetary easing measures implemented in the past 25 years. The negative overnight interest rate target introduced in January 2016 has been unpopular among lenders as it squeezes their profit margins.