Bank of Japan Keeps Tightening Bias With Policy Rate at 1% and Outlook Update Due

The Bank of Japan enters its late-July policy meeting maintaining a gradual tightening stance, with its short-term policy rate at 1%, the highest level since 1995. The central bank raised rates by 25 basis points in June, continuing a step-by-step normalisation away from the near-zero settings of the past decade as underlying inflation approaches its 2% target. Officials have signalled a continued bias toward higher rates over time, aiming to move gradually toward a neutral level estimated at around 2%, while stressing that financial conditions remain accommodative. The meeting comes as the bank refreshes its quarterly Outlook for Economic Activity and Prices, giving updated projections for growth and inflation. The recent surge in oil prices amid Middle East tensions complicates the picture, adding to price pressures even as it clouds the growth outlook, and market volatility has weighed on Japanese equities. The yen remains a focal point, since the pace and timing of rate moves influence currency flows and the global carry trade. Investors will watch both the decision and the governor's remarks closely for signals on how quickly the bank intends to proceed.