The Bank of Japan kept its policy rate unchanged, reinforcing a cautious approach to normalization while acknowledging fresh inflation risks.

## What happened

The BOJ held its benchmark rate at 0.75%. Policymakers noted that inflation risks are tilted to the upside due to the recent rise in crude oil prices, even as core inflation may cool temporarily.

## Why it matters for markets

Japan remains heavily dependent on energy imports, so oil price swings can quickly influence inflation dynamics and the currency. For global investors, BOJ policy impacts:

- The yen and hedging costs

- Japanese government bond yields

- Risk sentiment in Asia-Pacific equities

## The wage-growth watch

The BOJ has emphasized the importance of sustained wage gains for achieving durable inflation. Investors are watching spring wage negotiations for signs that domestic demand can support inflation even as import costs fluctuate.

## What to watch next

- Yen volatility and BOJ communication around market stability.

- Bond market reaction and the yield curve.

- Wage negotiation outcomes and upcoming inflation data.