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Japan Interest Rate

Japan Interest Rate

BOJ Policy Rate in Japan

Japan's central bank maintained ultra-low policy rates over the decade to 2023, 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. That said, the bank moved rates back into positive territory in 2024 in response to robust price pressures and a weak yen.

The boj policy rate ended 2024 at 0.25%, compared to the end-2023 value of -0.10% and the figure a decade earlier of 0.10%. It averaged -0.03% over the last decade. 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 2024.
Source: Macrobond.

Japan Interest Rate Data

2020 2021 2022 2023 2024
BOJ Policy Rate (%, eop) -0.10 -0.10 -0.10 -0.10 0.25
TONAR (%, eop) -0.03 -0.02 -0.02 -0.04 0.23
10-Year Bond Yield (%, eop) 0.02 0.07 0.41 0.62 1.08

Bank of Japan leaves rates unchanged; slows bond sales

Rates remain on pause: At its meeting ending on 17 June, the Bank of Japan (BOJ) decided to keep its policy rate at 0.50%, extending the pause in its hiking cycle from subzero rates that began just over a year ago. The decision was expected by market analysts. The BOJ also said it would halve government bond sales to JPY 200 billion per month from the next fiscal year, a decision also expected by economists.

Trade uncertainty drives decision again: The BOJ said that although it would continue to raise rates ahead, it would not do so for the time being, citing “high uncertainty and downside risks” regarding the impact of trade policies—a reference to Trump’s tariffs—on domestic economic activity and therefore inflation. Regarding the decision to slow its sale of bonds, the BOJ said that it remained committed to reducing its holding of public debt—about 50% of which is owned by the Bank—to reduce dysfunction in the bond market, but a slowdown was needed to avoiding “rapid fluctuations” in yields, whose volatility has recently risen to the highest level in over 20 years.

Consensus Forecast remains unchanged: Our panelists’ forecasts for Japan’s policy rate at the end of this year have remained unchanged since early May. Trade talks remain a major risk, but for now, our panelists see the BOJ raising its policy rate by 25 basis points by December, likely in Q4. This is in line with the BOJ’s forward guidance that it will “continue to raise” its policy rate assuming its outlook for GDP growth and inflation is realized. The BOJ’s next meeting is scheduled for 30–31 July.

Panelist insight: Goldman Sachs analysts said: “We think the BOJ believes a wait-and-see strategy is best from a risk management perspective for the time being, but that there is no change in its stance of gradually raising interest rates as underlying inflation gradually increases.”

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 31 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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