Interest Rate in Japan

Japan Interest Rate | Economic News & Forecasts

Japan - Interest Rate

Bank of Japan keeps its monetary policy steady in September

The Bank of Japan left its monetary policy stance unchanged at its 20–21 September meeting, as expected by market analysts. The Bank decided to continue with its stimulus program (officially known as the “Quantitative and Qualitative Monetary Easing with Yield Curve Control” framework) for as long as is necessary to achieve its 2.0% inflation target. The Bank’s board members voted 8 to 1 in favor of continuity. The newest Bank board member, Goushi Kataoka, dissented from Governor Haruhiko Kuroda and the other members, arguing in a dovish stance that more needs to be done to achieve the inflation target. The short-term policy rate applied to current account balances held by financial institutions at the Bank was left at minus 0.1%, 10-year bond yields were capped at around 0% and the pace of Japanese government bond purchases remained at JPY 80 trillion (USD 714 billion) annually.

The Bank of Japan, in continuing to pursue an accommodative monetary policy, is increasingly out of sync with its international peers. The U.S. Federal Reserve, for example, is tightening its own policy. Strong economic growth, high employment levels and a healthy external sector have not yet translated into inflation reaching its target in Japan; currently it stands at around 0.5%, with short-term inflation expectations also remaining weak. The Bank’s continued monetary policy stance should help lift inflation closer to target going forward.

Market analysts do not expect the Bank of Japan to change its accommodative monetary policy stance in the near future. Risks to the economic outlook for Japan include policy uncertainty from the United States; developments in emerging and commodity-exporting economies; and negotiations on the United Kingdom’s exit from the European Union, given that both are key Japanese trading partners; and geopolitical risks. The Bank’s next monetary policy meeting is scheduled for 30–31 October.

The analysts FocusEconomics polled this month expect the Bank of Japan’s short-term policy rate to end both this year and 2018 at minus 0.09%. The 10-year bond yield is expected to be 0.05% at the end of this year, before rising slightly to 0.09% in 2018.
FocusEconomics Consensus Forecast panelists expect the yen to trade at 113.3 per USD at the end of 2017. For 2018, the panel projects that the yen will trade at 112.2 per USD.

Japan - Interest Rate Data

2012  2013  2014  2015  2016  
Policy Interest Rate (%)0.10  0.10  0.10  0.10  -0.10  

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Japan Interest Rate Chart

Japan Interest Rate
Note: Overnight Call Rate in %.
Source: Bank of Japan.

Japan Facts

Bond Yield0.07-4.41 %Oct 19
Exchange Rate112.6-0.35 %Oct 19
Stock Market21,4490.40 %Oct 19

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