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Japan Interest Rate

Japan Interest Rate

BOJ Policy Rate in Japan

Japan's central bank maintained ultra-low policy rates from 2013 to 2022 as part of its aggressive monetary easing strategy to combat deflation and stimulate economic growth. The Bank of Japan even adopted negative interest rates from 2016, reflecting its ongoing battle against deflationary pressures and a stagnant economy.

The BOJ Policy Rate ended 2022 at -0.10%, in line with the -0.10% end-2021 value and down from the reading of 0.10% a decade earlier. For reference, the average policy rate in Major Economies was 3.50% at end-2022. For more interest rate information, visit our dedicated page.

Japan Interest Rate Chart

Note: This chart displays Policy Interest Rate (%) for Japan from 2014 to 2023.
Source: Bank of Japan.

Japan Interest Rate Data

2018 2019 2020 2021 2022
BOJ Policy Rate (%, eop) -0.10 -0.10 -0.10 -0.10 -0.10
TONAR (%, eop) -0.06 -0.07 -0.03 -0.02 -0.02
10-Year Bond Yield (%, eop) 0.00 -0.03 0.02 0.07 0.41

Bank of Japan holds policy rate in April despite plunging yen

After raising its policy rate for the first time in 17 years last month, at its meeting on 25–26 April, the Bank of Japan (BOJ) left it unchanged at 0.00–0.10%. The decision was unanimous and had been expected by the market.

The BOJ decided to leave rates unchanged as, according to its latest prices outlook, it judged that inflation will “be at a level that is generally consistent” with its 2.0% target through the end of its forecast horizon. The Bank slightly raised its projection for core inflation in FY 2024 and FY 2025 compared to its last estimates in January by 0.4 and 0.1 percentage points—to 2.8% and 1.9%—respectively, pointing to the recent rise in crude oil prices. The hold came despite increasing pressure on the yen, which recently fell to the lowest level in 34 years; in a post-decision press conference, BOJ Governor Kazuo Ueda said that the weaker currency was having “no major impact” on price pressures.

The BOJ’s policy rate guidance in its outlook report remained dovish. The Bank said that it sees monetary policy remaining “accommodative” for the “time being” and will only adjust rates if its projections for economic activity and inflation are realized. Most of our panelists expect the BOJ to raise rates further this year, with some seeing increases in Q3 and the rest in Q4.

On the possible impact of the yen’s recent depreciation on monetary policy, Nomura’s Kyohei Morita said: “At this stage, we see little worry that yen depreciation will cause Japan's inflation trend to derail in an upward direction. While yen-denominated import prices are the first entry point by which a weaker yen affects prices in Japan, the rise in these import prices is still slow, at +1.4% y-y as of March. […] Although FX could come to affect monetary policy operations if it were deemed to be affecting the inflation trend, we do not expect the BOJ to hike rates with the primary aim of stabilizing the currency any time soon.”

Consensus Forecasts and Projections for the next ten years

How should you choose a forecaster if some are too optimistic while others are too pessimistic? FocusEconomics collects Japanese interest rate projections for the next ten years from a panel of 19 analysts at the leading national, regional and global forecast institutions. These projections are then validated by our in-house team of economists and data analysts and averaged to provide one Consensus Forecast you can rely on for each indicator. By averaging all forecasts, upside and downside forecasting errors tend to cancel each other out, leading to the most reliable interest rate forecast available for Japanese interest rate.

Download one of our sample reports to visualize what a Consensus Forecast is and see our Japanese interest rate projections.

Want to get access to the full dataset of Japanese interest rate forecasts? Send an email to info@focus-economics.com.

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