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Economy

Bank of Japan Holds at 1.25%, More Than Doubles Pace of ETF Sales

The Bank of Japan held its policy rate at 1.25% on Friday, Oct. 30, in an 8-1 vote and raised its ETF sales pace to about 860 billion yen a year.

By Global Market News Staff · · 3 min read
Traditional Japanese buildings in front of modern glass skyscrapers
Photo: Margo Evardson / Unsplash

Why it matters

  • The Bank of Japan kept its overnight call rate target at around 1.25% on Friday, Oct. 30, by an 8-1 vote. Board member Hajime Takata dissented and proposed a hike to 1.5%.
  • In a unanimous vote, the BoJ raised the pace of its ETF sales to about 860 billion yen a year at book value, from about 330 billion yen, starting in January 2027.
  • The board's median forecast for core inflation in fiscal 2027 rose to 2.6% from 2.4%, and the BoJ said it "will continue to raise the policy interest rate.

The Bank of Japan left its short-term policy rate unchanged on Friday, Oct. 30, keeping the uncollateralized overnight call rate at around 1.25%, by an 8-1 vote, the BoJ said in a statement released at 12:02 Tokyo time (03:02 GMT). In a separate unanimous vote, it more than doubled the pace at which it sells its holdings of exchange-traded funds.

The yen firmed slightly after the decision, and Japan's 10-year government bond yield fell.

Did the Bank of Japan raise interest rates today?

No. The Policy Board decided the BoJ "will encourage the uncollateralized overnight call rate to remain at around 1.25 percent" until the next meeting, the statement said.

One member, Hajime Takata, voted against. He argued that with underlying inflation having reached the 2% price stability target, the BoJ needs to "step up the pace" of moving its rate toward the neutral level, according to the statement. He proposed a rate of around 1.5%. The proposal was defeated by a majority vote.

What changed in the BoJ's ETF sales?

The BoJ will sell ETFs at about 0.1% of stock market trading value, or about 860 billion yen a year at book value, up from about 330 billion yen. That is about 2,460 billion yen at market value, the BoJ said. The change starts in January 2027.

The bank began selling ETFs in January 2026. It said the sales have gone "smoothly while avoiding a major impact on the market," while trading value in the stock market has grown. Sales of Japanese real estate investment trusts stay at about 5 billion yen a year.

What did the Outlook Report forecast?

The BoJ said core inflation is likely to "accelerate to a level clearly above 2 percent" in the first half of its projection period, citing higher crude oil prices, rising prices for semiconductors and other items, and the weak yen. It expects inflation to ease back toward about 2% later. The bank said risks to prices are "skewed to the upside." For more on the oil shock, see our energy market news page.

Board median forecastFY2026FY2027FY2028
Real GDP0.7% (+0.1)0.7% (-0.1)0.8% (unch.)
CPI less fresh food2.5% (unch.)2.6% (+0.2)2.0% (unch.)
CPI less fresh food and energy2.4% (-0.1)2.7% (+0.1)2.3% (+0.1)

Source: Bank of Japan, Outlook Report (October 2026). Changes are versus the July 2026 report.

On policy, the BoJ said that with underlying inflation "generally consistent" with its 2% target and financial conditions accommodative, it "will continue to raise the policy interest rate," while weighing risks including the Middle East, AI-related demand and currency moves. The full Outlook Report is due Monday, Nov. 2.

How did the yen and JGBs react?

The dollar slipped against the yen. USD/JPY fell to about 157.13 by 03:15 GMT from about 157.57 at 03:00 GMT, according to Yahoo Finance five-minute data. It traded near 157.29 at about 13:20 GMT, down about 0.3% from Thursday's close of 157.83.

Japan's 10-year government bond yield fell 7 basis points to 2.77% on Friday, according to Trading Economics. Yields move opposite to prices.

The Nikkei 225 closed down 2.1% at 63,290.11, from Thursday's 64,659.47, Yahoo Finance data show.

The BoJ decision came a day after the ECB's decision to hold its deposit rate at 2.50%. For background on Japan's price pressures, read our story on Tokyo core inflation jumping to 2.7%, and find more central bank coverage in our economy section.

Sources

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