Bank of Japan hits 2% inflation, holds 1.25% rate

Business Oct 30, 2026

After years of trying, the Bank of Japan (BOJ) has reached its 2% inflation goal for the first time since setting it in 2013.

Even with this achievement, the BOJ is playing it safe and keeping interest rates steady at 1.25%, as higher oil prices and rising semiconductor prices keep climbing and the yen stays weak.

Core inflation 2.1% prompts BOJ shift

The BOJ set this inflation target to fight off deflation and give the economy a boost, but rising prices have put extra strain on everyday budgets.

Now, with core consumer inflation at 2.1%, the bank is slowly shifting away from its super-loose money policies.

There's growing buzz about a possible rate hike in December as officials try to balance stable prices with supporting growth.