BOJ leaves interest rate steady at 0.5% as expected

[Japanese yen bank note]
fatido

The Bank of Japan left its benchmark short-term interest rate steady at 0.5% during the September 2025 meeting, maintaining borrowing costs at the highest level recorded since 2008 and in line with market expectations.

The policy rate remaining at 0.5% signals the continuation of the Bank of Japan's cautious approach to tightening after years of ultra-low and negative interest rates.

At Friday's meeting, the BoJ announced it would begin selling its holdings of exchange-traded funds ((ETFs)) and real-estate investment trusts ((REITs)).

The board noted Japan’s economy had recovered moderately despite some weakness. Private consumption was resilient, helped by improving employment and income. Exports and industrial output remained subdued, with front-loading ahead of U.S. tariff hikes and a subsequent pullback.

Separately, Japan's annual inflation rate eased to 2.7 [https://seekingalpha.com/news/4496406-japans-inflation-eases-to-27-in-august]% in August 2025 from 3.1% in the previous month, marking the lowest reading since October 2024.

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