BOJ likely to hold at July meeting, services price rise continues, PM's falling approval rating also in focus

BOJ to Hold at July Meeting, Also Considering Upward Revision of GDP At the monetary policy meeting on July 30-31, the BOJ is expected to keep the policy rate at 1%. While assessing the effects of the June rate hike, it is also adjusting toward an upward revision of its growth outlook for fiscal 2026, citing factors such as AI demand. 123

June Services Prices Rise 3.2%, Driven by Surging Transport Costs The corporate services price index released by the BOJ on July 27 rose 3.2% from a year earlier. Fuel costs and maritime/air freight rates remained high due to the Middle East conflict, strengthening expectations for additional BOJ rate hikes. 4567

PM Takaichi Defends Growth Strategy Despite Record-Low Approval Rating Amid Weak Yen In a parliamentary session on July 27, Prime Minister Takaichi argued that her growth strategy would lead to confidence in the yen, even as her approval rating fell to its lowest level due to rising living costs caused by the weak yen. While acknowledging the BOJ's independence, she emphasized the importance of coordination with the government. 89

Nikkei Average Rebounds but Semiconductor Stocks Weak, Welcoming Easing of Iran Situation The Nikkei average closed on July 27 at 64,931 yen, up 0.5% from the previous weekend. Crude oil prices fell after Trump postponed a large-scale attack on Iran, leading to buying in cyclical stocks, but AI and semiconductor-related stocks continued to adjust. 101112