Japan's Indexes Plunged 3%, BoJ Held Rates at Three-Decade Highs

Akira Ito
19 Mar, 2026
Tokyo

Stocks in Japan plunged, tracking losses in overnight trading on Wall Street. 

The Nikkei 225 Stock Average declined 3%, the broader Topix Index decreased 2.4%, and the yen eased to 159.64 against the U.S. dollar.

The Bank of Japan held its benchmark rate at 0.75%, keeping borrowing costs at their highest since September 1995.

The rate decision was passed by an 8-1 vote, as policymakers held views that Japan's moderate economic recovery could be derailed from rapidly escalating tensions in the Middle East. 

Japan is heavily dependent on the Middle East nations for its energy needs and shipments through the Strait of Hormuz.

The policy committee reiterated its intention to lift rates if inflation and economic growth projections evolve as estimated. 

The yen dropped to a multi-month low following the BoJ's rate decisions. 

The U.S. Federal Reserve held its key lending rate range between 3.5% and 3.75% and signaled a possible one rate cut this year, followed by another in 2027. 

The U.S. Fed policymakers held rates steady for the second time this year, and the Iran war complicated the future rate outlook as higher crude oil prices stoked fears of higher inflation for longer.

Policymakers also revised the GDP annual growth rate to 2.4% from the previous estimate of 2.3% but left its jobless rate unrevised at 4.4% for 2026, respectively.

The committee also lifted its inflation estimate in light of the sharp jump in fuel and energy product prices. 

PCE and core PCE inflation estimates were revised higher to 2.7%, higher than December's projections of 2.4% and 2.5%, respectively. 

Japan's shares followed a sharp sell-off on Wall Street amid worries that February's hotter-than-expected producer price inflation at 3.4% is likely to narrow the scope for future rate cuts. 

 

Japan Indexes and Stocks 

The Nikkei 225 Stock Average declined 3% to 53,542.02, and the broader Topix Index dropped 2.4% to 3,628.77. 

Brent crude oil jumped 4% to $112.06 a barrel amid reports that the Trump administration is preparing to deploy between 2,500 and 6,000 troops for a ground invasion of Iran. 

Artificial intelligence infrastructure investment-related stocks led the decliners in Tokyo's trading on Thursday.

Softbank Group, Kioxia Holdings, Advantest Corp., and Tokyo Electron decreased between 3% and 6%. 

Nippon Yusen, Mitsui O.S.K. Lines, and Kawasaki Kisen Kaisha declined between 1% and 3%. 

Sumitomo Mitsui Financial, Mizuho Financial, and Mitsubishi UFJ Financial fell between 1.5% and 2.0%.