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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

On 22–23 January, the Bank of Japan (BOJ) left its policy rate at -0.10% and its soft cap on 10-year government yields at 1.00%. The decision was expected by the market.

The BOJ appears to be persisting with its wait-and-see-attitude, with the outcome of wage negotiations in spring a particular focus; last year’s round led to the largest salary hike since 1993. Along with its policy decision, the BOJ also published updated inflation forecasts, with FY 2024 downgraded to 2.4% from 2.8% and FY 2025 upgraded to 1.9% from 1.8%. This suggests the BOJ is still reluctant to hike rates as inflation is still set to fall below its 2.0% target in the medium run.

A majority of our panelists expect the BOJ to begin raising its policy rate in Q2 2024—likely in April—with most of the rest expecting tightening later in the year. The 1.00% cap on bond yields is likely to be loosened or removed earlier. The spring wage negotiations will be a key factor to watch, as will commodity prices in light of the El Niño weather phenomenon and the Hamas-Israel war. The Bank’s next meeting is scheduled for 18–19 March.

Analysts at Fitch Solutions said: “We expect the Bank of Japan to raise its policy rate to 0.00% in H124. Additionally, we foresee the possibility of increased flexibility in yield-curve management commencing in Q124.” ING’s Min Joo Kang and Chris Turner commented: “There was no change in the forward guidance from today’s statement, and we don’t think the BoJ will deliver any policy changes at its next meeting in March […]. Governor Ueda has stated that more information will be available ahead of the April meeting than in March, so we're inclined to think that the latter is probably off the table.”

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 28 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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