Japan’s Nikkei surged 0.9% on Thursday as the Bank of Japan held interest rates steady and raised its inflation outlook, keeping investor sentiment buoyant amid global uncertainties.
Japan’s benchmark Nikkei 225 index rose 0.9% to 41,015.31 on Thursday after the Bank of Japan (BOJ) announced no change to its interest rate policy, in line with expectations. The broader Topix index also moved higher, gaining 0.7% as investors digested the central bank’s updated outlook.
While the BOJ refrained from any immediate tightening, it revised its inflation forecast upward, reinforcing expectations that rate hikes remain a viable path as inflation continues to move closer to its long-term target.
In its quarterly outlook, the BOJ acknowledged global economic risks, especially in the wake of evolving trade dynamics. The upward revision in inflation projections, however, indicates that the central bank may consider policy normalization if price pressures persist and the economy stabilizes.
Market participants are closely monitoring the upcoming press conference by BOJ Governor Kazuo Ueda for further clues on the timeline for any potential rate hikes. Speculation has intensified over a possible policy shift as early as October following a recent trade understanding between Tokyo and Washington, easing some uncertainties on the macroeconomic front.
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“The inflation forecast upgrade and steady rates send a strong message: the BOJ is preparing markets for a gradual policy shift, but on its own terms,” said a Tokyo-based equity strategist.
Among individual stocks, earnings reports drove notable movement. Stocks in export-heavy and copper-sensitive sectors like Fujikura and Furukawa Electric outperformed, each rising around 5.7%. Investors sought value in firms that would benefit from lower input costs.
Meanwhile, leading tech investor SoftBank Group also climbed 3.2%, contributing to broader sentiment. On the downside, Panasonic Holdings declined by 3.4%, reflecting earnings-driven repositioning among investors.
The BOJ’s latest decision underscores its cautious but deliberate strategy: avoid derailing recovery while signaling readiness for gradual policy tightening if inflation persists. This balance between dovish stance and hawkish foresight kept investors engaged and lifted the domestic equity market, despite broader global headwinds.
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