The Bank of Japan released a summary of opinions from its Monetary Policy Meeting held on October 29 and 30, 2026. Members noted that Japan’s economy has recovered moderately, although some weakness has been observed, partly due to the situation in the Middle East and the impact of higher energy and raw‐material prices.

For fiscal 2026, the Board expects the economy to continue growing at a moderate pace, albeit at a decelerated rate, supported by government measures and an increase in global AI‐related demand. From fiscal 2027 onward, growth is projected to rise moderately as the adverse effects of high energy and raw‐material prices are expected to wane.

Underlying CPI inflation has risen from around 0 percent to roughly 2 percent, which the Board judges to be generally consistent with its 2 percent price‐stability target. However, the year‐on‐year rate of increase in the CPI (all items less fresh food) is projected to exceed 3 percent toward the end of the fiscal year, raising a risk that underlying inflation could overshoot the target.

Wage growth is expected to remain close to this year’s rate, with little chance of a significant rise next year. This limits the risk of second‐round inflation effects, although the Board will monitor the outcome of next year’s spring wage‐negotiations and consumer‐price expectations.

Financial conditions are still regarded as accommodative, assessed through the real‐interest‐rate gap, corporate‐finance conditions, and the bank‐lending channel. Asset‐price movements, especially stock‐price gains, are largely attributed to the global expansion of AI‐related demand rather than monetary policy.

Given these assessments, the Board concluded that it is appropriate to maintain the current policy interest rate at this meeting to evaluate the cumulative impact of past rate hikes. At the same time, members indicated that future hikes may be necessary to bring the policy rate closer to the neutral rate, which they estimate to be considerably above 1 percent.

The BOJ also reflected on its ETF sales program, noting a year of smooth operations without major market impact, and suggested a possible reassessment of the sales pace to minimise disruptive effects while considering corporate‐governance implications.