BOJ Seen Holding Rates Steady Amid Energy-Driven Inflation Risks

The Bank of Japan began a two-day policy meeting on Monday to consider its interest rate path, with expectations that it will maintain its current stance as it evaluates the economic impact of rising energy costs, The Mainichi Shimbun reported.

If The nine-member Policy Board keeps the short-term policy rate at 0.75%, it would mark the third consecutive meeting without a rate change.

While inflationary pressures are building due to higher crude oil prices, the central bank is widely expected to adopt a wait-and-see approach.

The BOJ is also likely to revise upward its inflation forecast for the current fiscal year, from its previous estimate of 1.9%, reflecting elevated energy and commodity prices.

If the nine-member Policy Board keeps the short-term policy rate at 0.75%, it would mark the third consecutive meeting without a rate change, underscoring a cautious approach to tightening monetary policy.

Japan imports more than 90% of its crude oil from the Middle East, making it highly sensitive to supply disruptions in the Strait of Hormuz.

Recent geopolitical tensions have heightened concerns over energy security and inflation, factors that are likely to weigh heavily on the central bank’s policy decisions.