Bank of Japan raises this year's growth forecast to 0.6%, keeps benchmark rate unchanged

[Financial News, Tokyo = Seo Hye-jin correspondent] The Bank of Japan kept its benchmark interest rate at 1.0% per year on the 31st. While monitoring the impact of last month's rate hike, it raised its economic growth forecast to reflect expanding global AI investment and the government's stimulus measures.
At its Monetary Policy Meeting, the BOJ decided to keep the target for the unsecured overnight call rate, its policy rate, at 1.0% per year. Eight of the nine policy board members voted in favor, while only Hajime Takata dissented, arguing that rates should be raised to 1.25%.
In its economic and price outlook report released alongside the decision, the BOJ raised its forecast for real Gross Domestic Product (GDP) growth this year to 0.6% and next year to 0.8%, up 0.1 percentage point each. It said stronger global conditions driven by higher AI-related investment and the Japanese government's stimulus measures would support growth.
By contrast, it lowered this year's forecast for the Consumer Price Index (CPI), excluding fresh food, to 2.5%, down 0.3 percentage point from the previous estimate. The revision reflects the effect of the government's extension of electricity and gas bill subsidies.
However, it raised next year's inflation forecast by 0.1 percentage point to 2.4%, as the subsidy effect is expected to fade.
The BOJ raised its benchmark rate in June, citing upward pressure on prices from instability in the Middle East and higher global oil prices. At this meeting, however, it focused more on assessing the economic and price effects of the rate hike than on further tightening.
BOJ Governor Kazuo Ueda is scheduled to hold a press conference this afternoon to explain the future direction of monetary policy and the possibility of additional rate hikes.  

[email protected] Seo Hye-jin Reporter