The Bank of Japan published the minutes of its December 18–19, 2025 Monetary Policy Meeting, showing the Policy Board unanimously decided to tighten policy by raising the short-term policy rate by 0.25 percentage points. The guideline for money market operations was changed to encourage the uncollateralized overnight call rate to remain around 0.75 percent, with the interest rate on the complementary deposit facility set at 0.75 percent and the basic loan rate raised to 1.0 percent, effective December 22, 2025. The discussion cited a moderately recovering domestic economy, CPI inflation (all items less fresh food) running around 3 percent largely due to food prices such as rice, and expectations for continued wage increases amid tight labor market conditions. In the intermeeting period, the call rate had been around 0.5 percent and the Bank continued Japanese government bond purchases of about JPY 3.3 trillion per month under its June 2025 reduction plan. Members saw uncertainties around overseas trade and tariff policies as having declined, judged the wage–price mechanism likely to be maintained, and assessed that underlying inflation was rising moderately; most expected CPI inflation to decelerate to below 2 percent through the first half of fiscal 2026 before gradually moving toward a level consistent with the 2 percent target later in the projection period. For the future conduct of policy, the Board reiterated that, if the outlook was realized, it would continue to raise the policy interest rate and adjust the degree of monetary accommodation, deciding at each meeting without a preset pace. Although all rate decisions were unanimous, Hajime Takata and Naoki Tamura opposed parts of the accompanying statement’s wording on the inflation outlook.
Bank of Japan 2026-01-28
Bank of Japan minutes confirm unanimous 25 basis point rate hike with overnight call rate guided around 0.75 percent
The Bank of Japan's December 2025 Monetary Policy Meeting minutes show a unanimous decision to tighten policy by raising the short-term policy rate by 0.25 percentage points, adjusting the uncollateralized overnight call rate to around 0.75 percent, and increasing the basic loan rate to 1.0 percent. The Board noted a moderately recovering domestic economy with CPI inflation around 3 percent, driven by food prices, and anticipated continued wage increases, while projecting CPI inflation to decelerate below 2 percent in early fiscal 2026 before aligning with the 2 percent target.