The BoJ left its policy rate unchanged at 5.50% at its June 2026 meeting, stating that although inflation has stayed within its target range for the past three months, the outlook remains uncertain. The central bank noted that inflation risks stemming from geopolitical tensions have diminished but remain elevated, and it expects headline inflation to temporarily move above the upper end of the target range. It stressed that maintaining the current policy stance is appropriate to limit potential second-round effects from higher international commodity prices. Both headline and core inflation accelerated, with headline inflation surpassing the Bank’s latest forecast. The BoJ added that, while negotiations to end the Middle East conflict are ongoing, uncertainty remains high. It also highlighted that international commodity prices are still elevated and volatile, US financial conditions have tightened, and domestic demand is recovering, although growth risks continue to be skewed to the downside.