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Central bank · Japan·JPY

Bank of Japan

The BoJ runs the world's slowest tightening cycle. Track the current policy rate, Ueda statement language, BoJ outlook reports, and how BoJ moves drive USD/JPY, JPY crosses and global carry trades.

Policy rate
0.50%
Policy-Rate Balance
Effective
2026-01-24
Next meeting
2026-06-19
Cadence
8 times per year
TL;DR

The Bank of Japan ended the world's last negative-rate regime in March 2024 and continues gradual normalisation. The Policy Board meets 8 times per year. Ueda's statements at 03:00-05:00 UTC drive USD/JPY and JPY crosses 1-3% on surprise outcomes. The BoJ remains the dominant catalyst for global carry trade unwinds.

About the BoJ

The Bank of Japan was established in 1882 and is now headquartered in Tokyo's Nihonbashi district. It is the world's third-oldest major central bank (after the Riksbank and BoE). The Bank of Japan Act of 1997 granted operational independence; before that, the BoJ operated under Ministry of Finance direction.

Monetary policy is set by the Policy Board (9 members: Governor + 2 Deputies + 6 external members). Statements are released at irregular times during the Tokyo trading day (typically 03:00-05:00 UTC), making BoJ decisions the highest-volatility Asian session events globally.

The current framework reflects the post-2024 normalisation cycle: positive policy rate (ended NIRP in March 2024), abandoned YCC (yield curve control), gradual rate hikes guided by wage and inflation data. Forward guidance emphasises the Shunto spring wage settlements as the key signal — above-3% settlements anchor BoJ hawkishness.

Mandate & framework

Framework
Price stability target: 2% YoY CPI
Inflation target
2% (CPI) sustained, alongside wage growth verification

What drives BoJ policy

  • Core CPI (excluding fresh food): the BoJ's preferred inflation measure. Sustained above 2% YoY supports further rate hikes.
  • Shunto spring wage settlements (March-April results): the institutional anchor of BoJ normalisation pace.
  • Service prices CPI: the historically-weak component that the BoJ watches for sustained inflation dynamics beyond import-driven goods inflation.
  • JGB market dynamics: 10Y JGB yield level and curve shape inform pace of balance sheet reduction.
  • Yen exchange rate: rapid depreciation (USD/JPY above 155-160) increases political pressure and accelerates BoJ hawkishness.
  • MoF intervention signals: yen-buying interventions (October 2022, May/July 2024) coordinate with BoJ messaging.

Recent actions

2026-01-24
Raised policy rate by 25bp to 0.50% from 0.25% — first hike of 2026
2025-07-31
Raised by 25bp to 0.25%, signalling normalisation continues
2024-03-19
Ended NIRP and YCC, raised to 0.00-0.10%, historic exit from negative rates
2016-09-21
Introduced Yield Curve Control (YCC) framework alongside NIRP
2016-01-29
Introduced NIRP at -0.10% on deposit-rate balance

People also ask

What is the Bank of Japan?

Japan's central bank, established 1882. Operationally independent since 1997. Sets monetary policy via the 9-member Policy Board. Headquartered in Nihonbashi, Tokyo. Has run the world's slowest tightening cycle, exiting negative rates only in March 2024.

When does the BoJ meet?

The Policy Board meets 8 times per year, typically 2-day sessions ending Friday. Statements are released during the Tokyo trading day at irregular times between 03:00 and 05:00 UTC. Ueda press conferences follow at 06:30 UTC, often the higher-volatility event.

What is Yield Curve Control (YCC)?

The BoJ's framework from 2016 to March 2024 of capping the 10-year JGB yield (initially at 0%, gradually raised to 1.0% before being scrapped). It's a more direct form of QE than buying a fixed amount of bonds. Formally ended at the March 2024 meeting.

How does the BoJ affect USD/JPY?

Hawkish BoJ surprises strengthen yen sharply — USD/JPY drops 2-4% on hawkish hikes or guidance shifts. Dovish surprises (smaller-than-expected hikes, dovish dissent) lift USD/JPY. The asymmetric move is 5-10x larger on hawkish surprise than on dovish hold.

What is the Shunto?

The annual spring wage negotiation round between Japanese unions and major employers, with results published in March-April. Above-3% wage settlements two years running keep the BoJ in tightening mode. The 2024 and 2025 Shunto both delivered above 3.5%, anchoring normalisation.

Why is the BoJ so slow to normalise?

Japan emerged from 25 years of deflation only after 2022, and the BoJ wants sustainable inflation paired with wage growth before fully normalising. Premature tightening would crush nascent recovery. Hence the path: end NIRP (2024), end YCC (2024), gradual hikes from 0.25% upward.

Does Japan intervene in JPY?

The Ministry of Finance (MoF) intervenes, executed by the BoJ. Direct yen-buying interventions occurred at USD/JPY 160 in October 2022 and May/July 2024. Verbal intervention starts at USD/JPY 145-150. FX reserves at ~$1.3 trillion provide firepower.

FX pairs affected by BoJ policy

Primary sources