The Bank of Japan decided by a 7-1 majority to set the guideline for money market operations at around 1.0 percent for the uncollateralized overnight call rate for the intermeeting period, effective June 17, judging that Japan’s economy has recovered moderately despite some weakness partly due to the situation in the Middle East and that there is a risk underlying consumer price index inflation could deviate upward above the 2 percent price stability target as crude oil price pass-through progresses and medium- to long-term inflation expectations continue to rise. After raising the rate to around 0.75 percent in December 2025, the Bank had held it there in January, March and April 2026. In line with the move, it set the interest rate on the complementary deposit facility at 1.0 percent and the basic loan rate under the complementary lending facility at 1.25 percent, also effective June 17. The Bank said CPI excluding fresh food has recently been around 1.5 percent, or below 2 percent, partly because of government measures to reduce the household burden of higher energy prices, while the economy is expected to continue growing moderately at a decelerated rate and financial conditions remain accommodative, with negative real rates, increased funding demand and favorable CP and corporate bond issuance conditions. It said overseas economies have grown moderately on the whole, but higher crude oil prices, the future course of the Middle East situation, developments in global AI-re
Bank of Japan2026-06-16
Bank of Japan raises policy rate to 1.0%
The Bank of Japan raised its policy rate by 25 basis points to around 1.0 percent for the uncollateralized overnight call rate for the intermeeting period, by a 7-1 vote and effective June 17, citing a moderate economic recovery and upside risks that underlying consumer price index inflation could exceed the 2 percent target as higher crude oil prices feed through and inflation expectations rise. It also set the complementary deposit facility rate at 1.0 percent and the complementary lending facility basic loan rate at 1.25 percent, and said it will continue to raise the policy interest rate and adjust monetary accommodation in line with economic, price and financial conditions.