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ETFs in Focus as BOJ Holds Rates Steady Amid Rising Inflation Risks
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The Bank of Japan (BoJ) kept its policy rate unchanged at 0.75% on April 28, 2026, while revising its inflation outlook higher due to supply-side risks stemming from the Iran war.
The decision, which came in a split 6–3 vote, was in line with expectations from analysts polled by Reuters, as quoted on CNBC. The opposing members pushed for a rate hike to 1%, citing rising price pressures due to geopolitical tensions.
Growth Downgraded, Inflation Forecast Raised
The BOJ lowered its fiscal 2026 growth forecast to 0.5% from 1%, signaling a weaker economic outlook. At the same time, it raised its core inflation projection to 2.8% from 1.9%, well above its 2% target, as quoted on CNBC. The central bank warned that higher crude oil prices could weigh on corporate profits and household incomes.
Recent Economic Trends Show Mixed Signals
Japan narrowly avoided a technical recession in late 2025, with GDP rising 0.3% quarter over quarter and 1.3% year over year. Inflation trends have been mixed. “Core-core” inflation – which excludes fresh food and energy – eased slightly to 2.4%, its lowest level since October 2024.
Government Measures to Cushion Oil Shock
To mitigate the impact of rising oil prices, Japan has scrapped gasoline taxes and introduced subsidies. Still, the BOJ expects higher energy costs and wage pass-through effects to keep upward pressure on prices.
How to Play With ETFs?
According to Masahiko Loo of State Street Investment Management, the BOJ’s “hawkish hold” reflects efforts to defend the currency as much as control inflation, as quoted on the same CNBC article. Invesco CurrencyShares Japanese Yen Trust (FXY - Free Report) may gain from this move.
Value ETFs to Gain?
If rates rise in Japan, value-based ETFs are likely to fare better than growth stocks. Hence, investors can tap iShares MSCI Japan Value ETF (EWJV - Free Report) .
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ETFs in Focus as BOJ Holds Rates Steady Amid Rising Inflation Risks
The Bank of Japan (BoJ) kept its policy rate unchanged at 0.75% on April 28, 2026, while revising its inflation outlook higher due to supply-side risks stemming from the Iran war.
The decision, which came in a split 6–3 vote, was in line with expectations from analysts polled by Reuters, as quoted on CNBC. The opposing members pushed for a rate hike to 1%, citing rising price pressures due to geopolitical tensions.
Growth Downgraded, Inflation Forecast Raised
The BOJ lowered its fiscal 2026 growth forecast to 0.5% from 1%, signaling a weaker economic outlook. At the same time, it raised its core inflation projection to 2.8% from 1.9%, well above its 2% target, as quoted on CNBC. The central bank warned that higher crude oil prices could weigh on corporate profits and household incomes.
Recent Economic Trends Show Mixed Signals
Japan narrowly avoided a technical recession in late 2025, with GDP rising 0.3% quarter over quarter and 1.3% year over year. Inflation trends have been mixed. “Core-core” inflation – which excludes fresh food and energy – eased slightly to 2.4%, its lowest level since October 2024.
Government Measures to Cushion Oil Shock
To mitigate the impact of rising oil prices, Japan has scrapped gasoline taxes and introduced subsidies. Still, the BOJ expects higher energy costs and wage pass-through effects to keep upward pressure on prices.
How to Play With ETFs?
According to Masahiko Loo of State Street Investment Management, the BOJ’s “hawkish hold” reflects efforts to defend the currency as much as control inflation, as quoted on the same CNBC article. Invesco CurrencyShares Japanese Yen Trust (FXY - Free Report) may gain from this move.
Value ETFs to Gain?
If rates rise in Japan, value-based ETFs are likely to fare better than growth stocks. Hence, investors can tap iShares MSCI Japan Value ETF (EWJV - Free Report) .