Not to be released until 8:50 a.m.
Japan Standard Time on Wednesday,
March 25, 2026.
March 25, 2026
Bank of Japan
Minutes of the
Monetary Policy Meeting
on January 22 and 23, 2026
(English translation prepared by the Bank's staff based on the Japanese original)
Please contact the Secretariat of the Policy Board, Bank of Japan, in advance, to request
permission to reproduce or copy the content of this document for commercial purposes.
Please credit the source when quoting, reproducing, or copying the content of this document.
1
A Monetary Policy Meeting of the Bank of Japan Policy Board was held in the Head
Office of the Bank of Japan in Tokyo on Thursday, January 22, 2026, from 2:00 p.m. to 3:50
p.m., and on Friday, January 23, from 9:00 a.m. to 12:00 p.m.1
Policy Board Members Present
UEDA Kazuo, Chairman, Governor of the Bank of Japan
HIMINO Ryozo, Deputy Governor of the Bank of Japan
UCHIDA Shinichi, Deputy Governor of the Bank of Japan2
NOGUCHI Asahi
NAKAGAWA Junko
TAKATA Hajime
TAMURA Naoki
KOEDA Junko
MASU Kazuyuki
Government Representatives Present
NAKATANI Shinichi, State Minister of Finance, Ministry of Finance3
MAEDA Tsutomu, Deputy Vice -Minister for Policy Planning and Coordination,
Ministry of Finance4
IWATA Kazuchika, State Minister of Cabinet Office, Cabinet Office3
HAYASHI Sachihiro, Vice-Minister for Policy Coordination, Cabinet Office4
Reporting Staff
SHIMIZU Seiichi, Executive Director (Assistant Governor)
KAMIYAMA Kazushige, Executive Director
SUWAZONO Kenji, Executive Director
1 The minutes of this meeting were approved by the Policy Board at the Monetary Policy Meeting
held on March 18 and 19, 2026, as "a document describing an outline of the discussion at the meeting"
stipulated in Article 20, paragraph 1 of the Bank of Japan Act of 1997. Those present are referred to
by their titles at the time of the meeting.
2 Present via conference call.
3 Present on January 23.
4 Present on January 22.
2
NAKAMURA Koji, Executive Director5
OKUNO Akio, Director-General, Monetary Affairs Department
IDE Joji, Head of Policy Planning Division, Monetary Affairs Department
SUZUKI Koichiro, Director -General, Financial System and Bank Examination
Department
MINEGISHI Makoto, Director-General, Financial Markets Department
KAWAMOTO Takuji, Director-General, Research and Statistics Department
SUGO Tomohiro, Head of Economic Research Division, Research and Statistics
Department
CHIKADA Ken, Director-General, International Department
Secretariat of the Monetary Policy Meeting
FUKUDA Eiji, Director-General, Secretariat of the Policy Board
MIURA Yukihiro, Director, Deputy Head of Planning and Coordination Division,
Secretariat of the Policy Board
KAJITANI Tsutomu, Deputy Director, Secretariat of the Policy Board
YAGI Tomoyuki, Senior Economist, Monetary Affairs Department
KITAHARA Jun, Senior Economist, Monetary Affairs Department
ITO Yuichiro, Senior Economist, Monetary Affairs Department
5 Present on January 22 from 2:00 p.m. to 3:40 p.m., and on January 23 for the whole of the session.
3
I. Summary of Staff Reports on Economic and Financial Developments6
A. Market Operations in the Intermeeting Period
The Bank had been conducting money market operations in accordance with the
guideline for money market operations decided at the previous meeting on December 18 and
19, 2025.7 The uncollateralized overnight call rate had been in the ra nge of 0.727 to 0.729
percent.
Meanwhile, in December 2025, the Bank conducted Japanese government bond
(JGB) purchases of about 3.3 trillion yen per month. In January 2026, it cut down the monthly
purchase amount by about 400 billion yen, to about 2.9 tri llion yen per month; this was in
accordance with the JGB reduction plan decided at the June 2025 meeting.
B. Recent Developments in Financial Markets
In the money market, the uncollateralized overnight call rate had been at around
0.75 percent. The general collateral (GC) repo rate had been at around the same level as the
uncollateralized overnight call rate. As for interest rates on term instruments, yields on three-
month treasury discount bills (T-Bills) had increased slightly.
The Tokyo Stock Price Index (TOPIX) had risen significantly: while semiconductor
stock prices in particular had moved in line with developments in U.S. stock prices, the index
had also partly reflected expectations for future government policy in Japan. Yields on 10 -
year JGBs had risen significantly, mainly reflecting market views on future developments in
economic activity and prices and in monetary and fiscal policies. The liquidity indicators in
the JGB markets continued to improve on the whole. In the foreign exchange market, the yen
had depreciated against both the U.S. dollar and the euro over the intermeeting period.
C. Overseas Economic and Financial Developments
Overseas economies had grown moderately on the whole, although some weakness
had been seen in part, reflect ing trade and other policies in each jurisdiction. The U.S.
economy maintained solid growth on the whole, although some weakness had been seen in
part. European economies continued to be relatively weak on the whole, partly reflecting that
6 Reports were made based on information available at the time of the meeting.
7 The guideline was as follows:
The Bank will encourage the uncollateralized overnight call rate to remain at around 0.75
percent.
4
exports had seen a reactionary decline following earlier front-loading. The Chinese economy
had decelerated, mainly due to the impact of tariff increases and the gradually diminishing
effects of government policies, and as adjustment pressure continued in the real estate and
other markets. Emerging and commodity -exporting economies other than China had
improved moderately on the whole.
As for the outlook, although downward pressure stemming from the impact of trade
and other policies in each jurisdiction was expected to re main for the time being, overseas
economies were projected to return to a growth path, partly supported by global AI -related
demand. There were high uncertainties regarding the outlook, such as the impact of trade
policy in each jurisdiction, developments in global AI-related demand, and developments in
the Chinese economy.
With respect to overseas financial markets, market sentiment remained at an
improved level, reflecting reduced uncertainties over the outlook for the global economy. U.S.
and European lo ng-term interest rates were more or less unchanged over the intermeeting
period. U.S. stock prices had risen, with concerns over valuation adjustments particularly in
AI-related sectors having eased, and partly due to the impact of a rise in commodity pric es.
European stock prices had risen, moving in line with developments in U.S. stock prices.
Meanwhile, currencies in emerging economies had appreciated overall, with some currencies
appreciating on the back of economic indicators being more solid than mark et expectations
and copper prices having risen. Crude oil prices had risen recently against the background of
growing instability of the situation in Iran, after having fluctuated due to speculation over
Russian and Venezuelan crude oil supplies.
D. Economic and Financial Developments in Japan
1. Economic developments
Japan's economy had recovered moderately, although some weakness had been seen
in part. Regarding the outlook, the economic recovery -- particularly in exports -- was likely
to be moderate for the time being due to the impact of trade and other policies in each
jurisdiction; thereafter, however, the improving trend in the economy was likely to become
more pronounced, supported by factors such as the government's economic measures an d
accommodative financial conditions.
Exports continued to be more or less flat as a trend, while they had been affected by
5
the increase in U.S. tariffs. Regarding the outlook, exports were highly likely to remain
somewhat slow for the time being. This was because, although solid global AI-related demand
was expected to provide some support, exports were likely to be pushed down by a
reactionary decline following the front -loading ahead of the U.S. tariff increase and by the
adverse effects on final demand reflecting progress in the pass -through of tariff hikes to
selling prices.
Industrial production continued to be more or less flat. Regarding the outlook, it was
expected to remain more or less flat as a trend. This was because, although downward
pressure was likely to be exerted by a reactionary decline following the front -loading of
production ahead of the U.S. tariff increase and by a decrease in final demand reflecting
progress in the pass-through of tariff hikes to selling prices, domestic demand was projected
to be resilient, partly due to the effects of the government's economic measures.
Corporate profits remained at high levels on the whole, although downward effects
due to tariffs had been seen in manufacturing, and business sentiment had been at a favorable
level. In this situation, business fixed investment had been on a moderate increasing trend.
With regard to the outlook, business fixed investment was likely to continue on an increasing
trend, supported by moves to clear order backlogs and by labor-saving investment to address
labor shortages; that said, for the time being, downward pressure was likely to be exerted on
business fixed investment from a deceleration in corporate profits in manufacturing and a rise
in construction costs.
Private consumption had been resilient against the background of an improvement
in the employment and income situation, although it had been affected by price rises. The
consumption activity index (CAI; real, travel balance-adjusted) had increased slightly for the
July-September quarter of 2025, and continued to increase on average for the October -
November period, relative to that quarter, mainly for durable goods, such as automobiles and
household electrical appliances. Based on anecdotal information from firms, sta tistics
published by industry organizations, and high -frequency indicators, private consumption
since December seemed to have declined slightly from the previous month. Consumer
sentiment had seen a clear improvement recently, mainly on the back of a decline in the rate
of increase in food prices and the rise in stock prices; more recently, however, it had been
affected by concerns over a decline in inbound tourism demand due to the Chinese
government's request for its citizens to refrain from traveling to Japan. Regarding the outlook,
6
despite being under downward pressure stemming from elevated food prices, private
consumption was expected to remain resilient, supported by a rise in employee income and
by the government's measures to reduce the household burden of higher energy prices.
The employment and income situation had improved moderately. The number of
employed persons continued to increase steadily, mainly for regular employees. Nominal
wages per employee continued to increase steadily, albeit with f luctuations. With regard to
the outlook, employee income was likely to continue to see a steady increase at its current
pace for the time being, albeit with fluctuations.
As for prices, in international commodity markets, crude oil prices had been on a
declining trend, albeit with fluctuations, while copper prices had seen a clear increase.
Meanwhile, market prices of food had declined moderately. The year-on-year rate of increase
in the producer price index (PPI) had been on a decelerating trend, mainly due to the decline
in crude oil prices, and had been at around 2.5 percent recently. The year -on-year rate of
increase in the services producer price index (SPPI, excluding international transportation)
had been on a decelerating trend, being in the range of 2.5-3.0 percent recently, primarily
because the impact of the price hikes seen in 2024 had dissipated, although the rate itself
remained relatively high, mainly on the back of a rise in personnel expenses. With moves to
pass on wage increases to selling p rices continuing, the year-on-year rate of increase in the
consumer price index (CPI, all items less fresh food) had been at around 2.5 percent recently,
due to the effects of the rise in food prices, such as rice prices, and other factors. Inflation
expectations had risen moderately. With regard to the outlook, the year -on-year rate of
increase in the CPI was likely to decelerate to a level below 2 percent in the first half of 2026,
with the waning of the effects of the rise in food prices, such as rice prices, and pushed down
by a decline in energy prices reflecting the government's measures to reduce the household
burden of higher energy prices.
2. Financial environment
Japan's financial conditions had been accommodative.
Real interest rates had been neg ative. Firms' funding costs had increased. Firms'
demand for funds had increased moderately on the back of, for example, the recovery in
economic activity as well as mergers and acquisitions of firms. With regard to credit supply,
financial institutions' l ending attitudes as perceived by firms had been accommodative.
7
Issuance conditions for CP and corporate bonds had been favorable. In this situation, the year-
on-year rate of increase in the amount outstanding of bank lending had been in the range of
4.5-5.0 percent; that in the aggregate amount outstanding of CP and corporate bonds had been
in the range of 6.5-7.0 percent. Firms' financial positions had been favorable. The number of
bankruptcies of firms had been more or less flat.
Meanwhile, the year-on-year rate of change in the money stock had been in the range
of 1.5-2.0 percent.
3. Financial system
Japan's financial system maintained stability on the whole.
Profits of major banks had increased, owing in particular to a rise in net interest
income, mainly composed of interest on domestic loans. Meanwhile, their credit costs had
been at low levels. Their capital adequacy ratios remained sufficiently above the regulatory
requirements.
Profits of regional banks had increased, mainly on the back of the rise in net interest
income. Meanwhile, their credit costs had been at low levels. Their capital adequacy ratios
remained sufficiently above the regulatory requirements.
With regard to the financial cycle, of the 14 Financial Activity Indexes (FAIXs) that
comprise the heat map in the Financial System Report, 13 showed no significant deviation
from the trends. Regarding the financial gap, the positive gap remained narrower than a while
ago, and no major financial imbalances had been seen in current financial activities. However,
attention continued to be warranted on developments in asset prices, such as real estate and
stock prices, and it was necessary to continue paying close attention to whether financial
activities would not significantly deviate from real ec onomic activity. In addition, it was
necessary to carefully monitor the impact that factors such as the trade policy in each
jurisdiction, geopolitical risks, and developments in the foreign non -bank financial
intermediary (NBFI) sector had on the financial system through various channels.
II. Summary of Discussions by the Policy Board on Economic and Financial
Developments and the January 2026 Outlook for Economic Activity and Prices
A. Current Situation of Economic Activity and Prices
With regard to global financial and capital markets , members shared the view that
8
market sentiment remained at an improved level, reflecting reduced uncertainties over the
outlook for the global economy. As background to the fact that stock prices had been renewing
historical highs in many economies after the turn of 2026, one member pointed out that
expectations of economic recovery had heightened rapidly due to support from both the
monetary and the fiscal sides in each economy and to an expansion in inve stment reflecting
the global IT boom.
Members shared the recognition that overseas economies had grown moderately on
the whole, although some weakness had been seen in part, reflecting trade and other policies
in each jurisdiction. Many members pointed out that the global economy was highly likely to
remain solid, considering the decline in uncertainty regarding the effects of trade policies, the
expansion in AI -related demand, and other factors. One of these members expressed the
recognition that, considering also that accommodative policies had been adopted around the
world, on both the monetary and the fiscal front, the global economy was expected to go
through a shifting phase in 2026, where momentum toward recovery starts to operate.
Members agreed that the U.S. economy maintained solid growth on the whole,
although some weakness had been seen in part. Some members expressed the view that, with
the impact of tariff policies remaining limited on the whole, the economy had been solid
against the background of an increase in AI -related investment and an expansion in
consumption by the wealthy on the back of high stock prices. One of these members pointed
out that motor vehicle sales for the past two months had exceeded market expectations,
recovering from th e decline following the ending of subsidies for the purchase of electric
vehicles, and that this served as evidence of solid consumption. In addition, a few members
said that fiscal measures, such as income tax cuts, and deregulation were also expected to
boost economic activity. Meanwhile, one member expressed the view that, while IT -related
business fixed investment, particularly that related to AI, had led to the solidity in the U.S.
economy, uncertainties remained about, for example, risks surrounding employment and the
direction of monetary policy given these risks. A different member stated that the impact on
consumer prices in the United States of the price pass -through of tariff hikes could begin to
be pronounced, and it was therefore necessary to carefully monitor price-related data.
Members shared the view that European economies continued to be relatively weak
on the whole, partly reflecting that exports had seen a reactionary decline following earlier
front-loading. One member expressed the recognition that, while the economies continued to
9
pick up moderately on the whole, supported by policy interest rate cuts by the European
Central Bank, there had been disparities between individual economies, as seen in, for
example, the somewhat sluggish German economy and solid southern European economies.
Members shared the view that the Chinese economy had decelerated, mainly due to
the impact of tariff increases and the gradually diminishing effects of government policies,
and as adjustment pressure continu ed in the real estate and other markets. One member
expressed the recognition that, although deflationary pressure stemming from a real estate
downturn remained, the possibility of a sharp deterioration in the economy was low, as the
government's policy measures had provided support.
Members shared the recognition that emerging and commodity -exporting
economies other than China had improved moderately on the whole.
Members agreed that financial conditions in Japan had been accommodative. Some
members noted that real interest rates in the short- to medium-term zone, on which monetary
policy has a large effect, remained significantly low, and that accommodative financial
conditions were maintained. In addition, some members expressed the recognition that, while
not much time had passed since the policy interest rate hike in December 2025, financial
conditions continued to be accommodative, considering factors such as firms' and other
entities' demand for funds, financial institutions' lending attitudes, and iss uance conditions
for CP and corporate bonds. Regarding bank lending, one member expressed the view that,
while interest rates on market rate-linked loans had risen and many financial institutions had
announced plans to increase short -term prime rates and i nterest rates on ordinary deposits
from February 2026, financial institutions' lending attitudes had been active and firms'
financial positions remained favorable so far, even under these circumstances. One member
pointed out that the recent high growth in bank lending was attributable to an increase in
firms' appetite for investment, aiming for higher growth. In relation to this, a different member
expressed the view that, as far as recent developments in lending suggested, interest payments
on short- to medium-term borrowings for fixed investment funds and working capital could
be covered by favorable corporate profits and increased production and sales.
Based on the above deliberations on economic and financial conditions abroad and
financial conditions in Japan, members discussed the state of Japan's economic activity and
prices.
With regard to economic activity, members shared the recognition that Japan's
10
economy had recovered moderately, although some weakness had been seen in part. Many
members expressed the recognition that, although the effects of tariff increases continued to
be observed on the export side, domestic demand, such as business fixed investment and
private consumption, had been resilient. One member noted that, since around autumn 2025,
it had gradually become clear that the impact of tariff policies on Japan's economy remained
small relative to initial expectations. In addition, the member pointed out that, based on
reports presented at the meeting of the general managers of the Bank's b ranches, AI-related
demand in Japan had been diverse, including air-conditioning systems for data centers and
semiconductor manufacturing equipment, and AI -related demand had extended across
regions and industries to a greater extent than expected. This member then expressed the view
that the benefits of the expansion in demand had reached not only direct exporters but also
their subcontractors.
Members concurred that exports and industrial production continued to be more or
less flat as a trend, while they had been affected by the increase in U.S. tariffs. With regard
to inbound tourism demand, which accounts for about a quarter of services exports, one
member expressed the recognition that, although the number of visitors to Japan from China
had declined due to the impact of the Chinese government's request for its citizens to refrain
from travelling to Japan, the impact on inbound tourism demand as a whole had so far been
limited, owing to an increase in the number of visitors from other Asian economies.
Members shared the recognition that business fixed investment had been on a
moderate increasing trend, with corporate profits remaining at high levels on the whole,
despite being affected by tariff policies, and with business sentiment being at a favorable level.
A few members commented that business fixed investment had been solid, partly supported
by the global AI boom, and firms' demand for funds had increased.
Members concurred that private consumption had been resilient against the
background of the imp rovement in the employment and income situation, although it had
been affected by price rises. Some members expressed the recognition that, while
consumption of nondurable goods remained somewhat weak due to the rise in food prices, it
could be assessed th at overall consumption had been resilient. One member added that the
weakness in nondurable goods consumption could also be attributed to factors such as
demographic developments and changes in consumption preferences. The member continued
that some portio n of household spending had been shifting from goods consumption to
11
services consumption. A different member pointed out that, while the increase in food prices
had pushed down consumption until recently, since the rate of increase in food prices had
been gradually slowing, private consumption had picked up moderately. Meanwhile, one
member said that the rise in real estate prices in recent years could be increasing non -
homeowners' concerns about the future, thereby pushing down private consumption.
Members shared the view that the employment and income situation had improved
moderately. One member noted that steady progress in wage growth could be confirmed from
various aspects, considering factors such as the outlook regarding the 2026 annual spring
labor-management wage negotiations, solid winter bonuses of major firms, and an increase
in the proportion of job changers whose wages had risen. One member expressed the
recognition that, while the yen's depreciation pushes up the profits and wages of large firms,
it pushes down those of small and medium-sized firms. The member continued that attention
was thus warranted on the possibility that this, coupled with the yen's depreciation pushing
up prices, would lead to wider inequality.
As for prices, members agreed that, with moves to pass on wage increases to selling
prices continuing, the year-on-year rate of increase in the CPI (all items less fresh food) had
been at around 2.5 percent recently, due to the effects of the rise in food prices, such as r ice
prices, and other factors. One member noted that there had been signs of cost -push inflation
easing; as background to this, the member pointed out that price hikes as a result of firms'
efforts to make up for past increases in import prices, which had been seen in food prices in
particular, had been mostly completed. One member pointed out that the rise in rice prices
was triggered by supply shortages, but with the addition of demand factors during the
procurement of rice harvested in autumn 2025, it wa s possible that the rise in prices was a
result of a combination of multiple factors. On this basis, the member said that close attention
continued to be warranted on whether price rises that could not be explained simply by cost-
push factors emerged in ot her goods. A different member pointed out that, in areas such as
food and energy, where there was little room to absorb increasing costs in the intermediate
demand stage and a rise in import prices was significant, cost increases over the past few
years ha d been passed on to the CPI. The member continued that, however, as such
developments had led to households saving on other items, given their lack of financial
leeway, the pass-through of personnel expenses to prices had so far been moderate for prices
such as services prices, excluding dining -out and accommodations. A different member
12
pointed out that services prices continued to grow at a rate in the range of 2.5 -3.0 percent
when excluding public services and housing rent. The member then expressed the view that,
although there had recently been moves to implement a de facto price increase by lowering
the quality of services, it was likely that room for making such adjustments in quality would
become smaller and moves to raise prices would in turn become widespread. With these
developments in mind, this member expressed the recognition that the main driver of price
rises had shifted from raw material prices to personnel expenses, and inflation had started to
become stickier. In addition, one member pointed out that housing rent had risen, mainly in
urban areas. The member then expressed the view that this was partly due to an increase in
demand for rental housing, as there had been some postponements of home purchases due to
housing prices being pushed up b y the rise in material prices, reflecting inflation overseas
and the yen's depreciation, and by the rise in personnel expenses. Meanwhile, members
concurred that inflation expectations had risen moderately. A few members pointed out that,
with the ongoing shift from the deflationary norm, many of the indicators for inflation
expectations, including the BEI (break-even inflation) rate, which shows market participants'
inflation expectations, had been rising toward 2 percent. One of these members added that
the recent depreciation of the yen and the effects of fiscal policy had also contributed to the
rise in inflation expectations. Noting that the views of economic entities, specifically firms
and households, should be given due weight when assessing inflation expectations, a different
member expressed the view that the inflation expectations of firms and households had
reached approximately 2 percent.
B. Outlook for Economic Activity and Prices
In formulating the January 2026 Outlook for Economic Activity and Prices (Outlook
Report), members discussed the baseline scenario of the outlook for Japan's economic activity.
They shared the recognition that Japan's economy was likely to continue growing moderately,
with overseas economies returning to a growth path, and as a virtuous cycle from income to
spending gradually intensified, supported by factors such as the government's economic
measures and accommodative financial conditions, while the economy was projected to be
affected by trade and other policies in each jurisdiction.
Many members expressed the recognition that, in addition to the decline in
uncertainties regarding the U.S. economy and the impact of tariff policies, the government's
13
economic measures were likely to push up the economy. In rel ation to this, one member
expressed the view that, in examining the effects of fiscal spending, it was necessary to take
into account factors such as the degree of import inducement and the spending propensity of
households and firms. The member continued that the size of the effects of fiscal spending
was theoretically different between periods of economic expansion and recession. One
member pointed out that, in projecting the outlook for Japan's economy, it was also important
to consider aspects such as t he extent to which AI -related investment would expand with a
sense of labor shortage continuing to be strong, and the extent to which macroeconomic
productivity would be pushed up through corporate activities such as business succession and
mergers and acquisitions.
Members shared the recognition that, although downward pressure stemming from
the impact of tariff increases was expected to remain for the time being, Japan's exports and
industrial production were likely to recover moderately as overseas econo mies returned to a
growth path, partly supported by global AI-related demand.
Members shared the recognition that , supported in part by the government's
economic measures and accommodative financial conditions, business fixed investment was
likely to remain on an increasing trend, including labor-saving and digital-related investment
to address labor shortages, and research and development (R&D) investment.
Members agreed that, although private consumption was expected to be more or less
flat for the time being due to the remaining impact of price rises, it was projected to gradually
return to a moderate increasing trend, with a continued rise in employee income. One member
pointed out that , in addition to the past rise in food prices, housing rent ha d risen recently,
mainly in urban areas. The member then stated that, while measures had been taken by
national and local governments, developments in food prices and housing rent should be
monitored carefully, given that they significantly affect the sense of ec onomic well-being
among households and their consumption behavior.
Members shared the recognition that employee income was likely to continue to see
a steady increase at its current pace for the time being, albeit with fluctuations. They shared
the view that, thereafter, the growth momentum in employee income was likely to increase
somewhat, as the nominal wage growth rate was expected to accelerate again in reflection of
the recovery in corporate profits. Many members expressed the view that, with labor market
conditions continuing to be tight, the mechanism in which wages and prices rise moderately
14
in interaction with each other had been taking hold in Japan, and that a wide range of firms
would continue to raise wages steadily in the 2026 annual spring la bor-management wage
negotiations, following the solid wage increases in 2025. One of these members expressed
the recognition that, while it was highly likely that the upward momentum in nominal wages
would be maintained, the rate of increase in energy and food prices was expected to decline
gradually, and that in the CPI was also likely to decline. The member continued that it was
therefore projected that the rate of change in real wages would finally turn positive and remain
so.
Based on these discussions, members shared the recognition that, comparing the
projections with those in the October 2025 Outlook Report, the projected real GDP growth
rates for fiscal 2025 and 2026 were somewhat higher, with the former due to higher -than-
expected growth in overseas economies and the impact of the statistical revision to the GDP
figures, and the latter mainly reflecting the effects of the government's economic measures.
They continued that the rate for fiscal 2027 , on the other hand, was somewhat lower due to
the dissipation of the effects of the government's economic measures.
Members then discussed the baseline scenario of the outlook for Japan's price
developments. Most members concurred that the year-on-year rate of increase in the CPI (all
items less fresh food) was likely to decelerate to a level below 2 percent in the first half of
2026, with the waning of the effects of the rise in food prices, such as rice prices, and partly
due to the effects of government measures to address rising prices. However, members shared
the view that it was likely that the mechanism in which wages and prices rise moderately in
interaction with each other would be maintained, and that underlying CPI inflation would
continue rising moderately. Most members shared the recognition that, thereafter, since it was
projected that a sense of labor shortage would grow as the economy continued to improve
and that medium - to long -term inflation expectations would rise, it was expected that
underlying CPI inflation and the rate of increase in the CPI (all items less fresh food) would
increase gradually and, in the second half of the projection period of the January 2026
Outlook Report, be at a level that was generally consistent with the price stability target. In
response, one member expressed the recognition that, given the sustained wage increases in
recent years and the inflationary pressure stemming from domestic factors, the price stability
target had been more or less achieved. In addition, a different member expressed the view
that if the annual spring labor-management wage negotiations, developments in prices, and
15
inflation expectations evolved in line with the Bank's outlook, it could be judged as early as
spring 2026 that the underlying trend in prices had reached 2 percent.
Regarding pro jections for the CPI (all items less fresh food), a few members
expressed the view that, with the year -on-year rate of increase in the CPI falling below 2
percent temporarily, if firms raised wages by as much as in 2025, leading in turn to an increase
in disposable income, a growing number of firms, including those in the services sector, could
pass on higher personnel expenses to their selling prices. One of these members then pointed
out that it was necessary to closely monitor how the balance between pri ces, household
income, and private consumption evolved, including the effects of income transfers to
households due to the government's economic measures. Meanwhile, many members were of
the view that, as firms' price -setting behavior had been undergoing s ignificant change, the
pass-through to prices of higher import prices caused by the yen's depreciation had become
pronounced in recent years. These members continued that, given this, it was necessary to
pay closer attention to the effects of foreign exchange rates on prices. One of these members
said that with the yen's depreciation, it appeared that even low -priced imported goods had
become less likely to push down prices. The member then expressed the recognition that it
had become more likely that excha nge rate factors would push up prices, against the
background of the rising dependence on imports that had been observed in domestic demand.
Many members expressed the recognition that, given recent developments in various
indicators, underlying inflation had followed a moderate uptrend on the whole and was
approaching 2 percent. One member noted that some indicators for medium - to long-term
inflation expectations, including firms' inflation outlook in the Tankan (Short-Term Economic
Survey of Enterprises i n Japan), had been stable despite the recent deceleration in the CPI
inflation rate. On this basis, the member commented that, while the underlying inflation rate
had been at around 2 percent, its entrenchment was not sufficiently confirmed when
considering factors such as the vulnerability of Japan's economy observed in the past when it
had faced substantial negative shocks. This member then expressed the view that it was
necessary to closely monitor factors such as the effects that the deceleration in the pace of the
year-on-year increase in food prices and the government's measures to address rising prices
had on the underlying trend in prices. In addition, one member noted that, in a situation where
the CPI inflation rate had been decelerating due to temporary factors, indicators that capture
the underlying inflation trend -- such as the wage growth rate, inflation expectations, and the
16
rate of increase in services prices -- warranted more attention than actual developments in
price indices themselves. A different member pointed out that, given that the actual inflation
rate was highly likely to fall below the underlying inflation rate, it might be necessary for the
Bank to enhance its method of communication by, for example, excluding temporary
institutional factors such as subsidies when explaining developments in the CPI.
Based on these discussions, most members shared the recognition that, comparing
the projections with those in the October 2025 Outlook Report, the baseline scenario of the
outlook for prices was more or less unchanged.
Members then discussed upside and downside risks to economic activity and prices.
They shared the view that risks to the outlook included developments in overseas economic
activity and prices under the impact of trade and other policies in each jurisdiction, wage- and
price-setting behavior of firms, and developments in financial and foreign exchange markets,
and it was necessary to pay due attention to the impact of these risks on Japan's economic
activity and prices.
On this basis, members noted the following three factors as major risks to economic
activity: (1) developments in overseas economic activity and prices, (2) developments in
import prices, and (3) the impact of various changes in the environment surrounding Japan
on firms' and households' medium- to long-term growth expectations and on Japan's potential
growth rate. One member pointed out that, considering moves toward fiscal expansion,
particularly in the United States and Europe, in addition to the reduced uncertainty regarding
trade policies and solid IT -related demand, downside risks to overseas economies had
declined compared with the assessment presented in the October 2025 Outlook Report. One
member noted that AI-related investment was unlikely to beco me significantly unstable for
the time being with major high -tech firms in particular making business fixed investment;
however, attention should be paid to the risk that, if revenue did not increase in line with
investment, adjustment pressure could arise , accompanied by, for example, adjustments in
asset prices.
Regarding risks to prices , members concurred that, if the aforementioned risks to
economic activity materialized, prices would be affected, and that the following factors
warranted attention as risks specific to prices: (1) firms' wage- and price-setting behavior and
its impact on inflation expectations , and (2) future developments in foreign exchange rates
and import prices, including international commodity prices, as well as the extent to which
17
such developments would spread to domestic prices. Some members noted that attention
should be paid to the point that, with firms' behavior shifting more toward raising wages and
prices recently, exchange rate developments were more likely to affect prices, compared to
the past, and that such moves could affect underlying CPI inflation through changes in
inflation expectations. On this basis, one of these members added that, if the yen depreciated
further, it was possible that the rate of increase in the CPI would decline at a slower pace and
start to rise. With regard to developments in food prices, one member pointed out that elevated
rice prices seemed to have made it easier for other food prices to rise. The member then
expressed the view that, if rice prices did not decline significantly, the rise in overall food
prices might not easily subside. One member said that, given the change in the wage norm,
and with growing expectations of a recovery in overseas economies, it was necessary to pay
more attention to the upside risks to prices when considering the risk balance. A different
member noted that, with Japan's economy facing labor supply constraints, risks to prices had
become more skewed to the upside, as seen in, for example, the pass-through to prices of the
yen's depreciation, an expansion in demand driven by fiscal policies, and China's restrictions
on exports to Japan. In this regard, a few members expressed the recognition that, as the year-
on-year rate of increase in the CPI (all items less fresh food) was likely to decelerate, partly
due to the effects of government measures to address rising prices, it was necessary to
carefully examine whether this would lead to inflation expectations deviating downward from
the baseline scenario. One mem ber said that, recently, moves to cut costs had started to be
seen again at some firms. The member then pointed out that, if these efforts improved
productivity, this was likely to have a positive effect on wage increases in the medium to long
term. This m ember continued that, however, attention continued to be warranted on the
shorter-term effects on wages and prices, such as on possible wage hikes in fiscal 2027.
With regard to the risk balance, members shared the recognition that, judging each
member's r isk assessments as a whole, risks to both economic activity and prices were
generally balanced.
III. Summary of Discussions on Monetary Policy
Based on the above assessment of economic and financial developments, members
discussed monetary policy.
With respect to the guideline for money market operations for the intermeeting
18
period, most members shared the view that it was appropriate for the Bank to maintain the
guideline that it would encourage the uncollateralized overnight call rate to remain at around
0.75 percent.
Some members expressed the recognition that, given that the policy interest rate was
raised at the previous meeting held in December 2025, the Bank was currently at the stage of
closely monitoring developments in economic activity and prices as well as financial
conditions, including the effects of the policy change. One of these members pointed out that,
with regard to the impact of policy interest rate hikes on households, it should be taken into
account that (1) while the rise in interest rates would lead to an increase in nominal interest
payments on housing loans, delinquency rates on housing loans had been at low levels
recently, with rules such as the "5-year rule" and the "125 percent rule"; and that (2) the real
burden of housing loans for those in the working generation, who are the primary borrowers,
depended on wage growth rates. On this basis, the member expressed the view that, although
downward pressure on consumption stemming from the rise in interest rates warranted
attention, the impact on the overall financial system was likely limited, considering, for
example, the analyses made in the Financial System Reports . In addition, regarding the
impact on firms, some members expressed the recognition that financial institutions' lending
attitudes and firms' financial positions had thus far stayed at favorable levels on the whole,
and that the recent increase in firms' bankruptcies and discontinuations of businesses was not
primarily caused by rising interest rates, according to variou s surveys and research. A
different member added that, although some firms with super-long-term investment projects
and some small and medium -sized firms might be facing a heavy interest burden, for firms
as a whole, the increased interest burden had been absorbed by the current solid business
conditions to a large extent. On this basis, the member noted that, if the pace of policy interest
rate hikes was not too rapid, the Bank did not need to be overly concerned about the impact
on firms' business perform ance. Meanwhile, one member said that it was desirable for the
Bank to maintain the policy interest rate at this meeting, partly to assess the extent of the pass-
through of tariff hikes to consumer prices in the United States. The member continued that
such a decision was unlikely to increase concerns over the Bank falling behind the curve. A
different member expressed the recognition that, even though upside risks to prices had
increased, this did not necessitate a policy interest rate hike at every meeting, and thus it was
appropriate for the Bank to maintain the current policy interest rate until the next meeting.
19
On the other hand, one member expressed the view that it was desirable for the Bank
to raise the policy interest rate to around 1.0 percent at this meeting. The member pointed out
that the price stability target had been more or less achieved and, if overseas interest rate
environments changed in 2026, there was a risk that the Bank might unintentionally fall
behind the curve. This member then said that Japan's real policy interest rate was at the lowest
level globally, and since foreign exchange market participants pay attention to real interest
rate differentials, it was also necessary from a forward -looking perspective for the Bank to
adjust the significantly negative real policy interest rate relatively early.
As for the future conduct of monetary policy , members concurred that, given that
real interest rates were at significantly low levels, if its outlook for economic activity and
prices was realized, it was appropriate that the Bank, in accordance with improvement in
economic activity and prices, continue to raise the policy interest rate and adjust the degree
of monetary accommodation. On this basis, members shared the view that, with the pr ice
stability target of 2 percent, the Bank would conduct monetary policy as appropriate, in
response to developments in economic activity and prices as well as financial conditions,
from the perspective of sustainable and stable achievement of the target. With regard to the
pace of adjusting the degree of monetary accommodation, most members expressed the
recognition that it was desirable for the Bank to make decisions as appropriate at each
Monetary Policy Meeting without having a specific pace in mind, c arefully examining
developments in economic activity and prices as well as financial conditions. One of these
members expressed the view that the level of the natural rate of interest would have to be
approximated by examining the response of economic acti vity, prices, and financial
conditions to changes in short -term interest rates. The member continued that this did not,
however, imply a slowdown in the pace of policy interest rate hikes; rather, the pace would
be determined as a result of the Bank's cont inued monitoring of the response of economic
activity, prices, and financial conditions and its assessment of the natural rate of interest. One
member pointed out that, considering the recent depreciation of the yen, current financial
conditions were still considerably accommodative. The member then commented that the
underlying trend in prices had been steadily approaching 2 percent, and it would be necessary
for the Bank to continue to adjust the degree of monetary accommodation at the appropriate
time. One member stated that, particularly given that it seemed unlikely for the real economy
to overheat and fall into extremely high inflation, it could not be said that the risk of the Bank
20
falling behind the curve had necessarily become more evident recently. The member
continued that it was, however, becoming even more important for the Bank to conduct
monetary policy carefully and in a timely manner. A different member noted that, given that
addressing rising prices was an urgent priority in Japan, the Bank should not take too much
time examining the impact of raising the policy interest rate, and should proceed with the next
step, a rate hike, without missing the appropriate timing. One member expressed the
recognition that it was appropriate for the Bank to raise the policy interest rate at intervals of
a few months, while examining the impact of rate hikes on firms' and households' behavior
through anecdotal information and assessing the current policy interest rate relative to the
neutral rate. On this bas is, the member expressed the view that the depreciation of the yen
and the rise in long -term interest rates, both of which had been observed recently, largely
reflected fundamentals, such as inflation expectations. This member then pointed out that, in
this situation, the only prescription from the monetary policy side was to raise the policy
interest rate in a timely and appropriate manner.
With regard to the future conduct of monetary policy, members also discussed how
they should consider the neutral interest rate. Many members expressed the view that, in the
second half of the projection period of the January 2026 Outlook Report, underlying CPI
inflation was expected to be at a level that was generally consistent with the price stability
target. These members continued that, at that time, it would be desirable for the policy interest
rate to be roughly close to the neutral rate. In this regard, many members pointed out that it
was difficult to identify the neutral interest rate level in advance, and the B ank would
therefore need to continue attempting to identify the level of the neutral rate, while carefully
examining the effects of each rate hike on economic activity and prices. One of these members
added that, in attempting to identify the neutral interest rate level, it was important to examine
changes in the spending behavior of firms and households resulting from policy interest rate
hikes, not only through statistical data but also through anecdotal information from firms.
One member expressed the recognition that the neutral interest rate was an important concept
from a theoretical perspective, but that in the case of Japan, there was room for debate over
the efficacy of deriving estimates from data from the prolonged deflationary period. The
member continued that, when estimating Japan's neutral interest rate, it was harder to apply
the assumptions that were appropriate for estimations for a large country like the United
States; in this respect, attention was also warranted on the fact that estimates of Japan's neutral
21
interest rate were susceptible to overseas interest rate environments, particularly in the United
States. Meanwhile, a different member said that, while the Bank naturally would not make
monetary policy decisions based solely on estimat es of the neutral interest rate, it was
expected that these estimates would increasingly become a topic of discussion, in a situation
where the achievement of the price stability target was approaching. The member continued
that it was therefore desirable for the Bank to continue communicating with the public
regarding the neutral rate, while refining its dissemination of information as necessary.
Members also discussed recent developments in long -term interest rates and the
Bank's response in light of these developments. Many members expressed the recognition
that the recent rise in long-term interest rates was attributable to both an increase in expected
short-term interest rates, stemming from the rise in underlying inflation, and an increase in
term premiums. Some of these members pointed out that the increase in term premiums could
have reflected market views on fiscal policy. One member stated that, while the rise in long-
term interest rates over the past few years could be regarded as part of the n ormalization of
the JGB markets and a factoring in of the achievement of the price stability target, the
developments seen over the past two weeks or so had been a one-sided steepening of the yield
curve, which warranted attention. Some members noted that there was a larger impact on the
super-long-term JGB market, where liquidity is low; specifically, yields of super -long-term
JGBs had risen significantly, partly because of the approaching end of the fiscal year. These
members then expressed the recognitio n that it was necessary to continue paying close
attention to whether these developments would spread across the JGB markets as a whole.
Meanwhile, one member expressed the view that upward pressure on risk premiums,
stemming from factors such as fiscal co nditions and inflation, had been partly offset by the
stock effect, namely, downward pressure on long -term interest rates from the Bank's JGB
holdings. In relation to this, a few members pointed out that, even if the amount outstanding
of the Bank's JGB ho ldings were the same, the extent of the stock effect generated in the
process of reducing the Bank's JGB purchases and that generated in the process of increasing
purchases might not necessarily be identical , and the stock effect could be asymmetrical.
These members continued that this was because the way in which the effects materialize
through expectations could differ. With regard to the Bank's stance on its JGB purchase
operations in light of developments in long-term interest rates, a few members expressed the
view that, from the perspective of encouraging the stable formation of interest rates, it was
22
appropriate for the Bank to respond in line with its current thinking that (1) in principle, long-
term interest rates were to be formed in financial markets; and (2) in an exceptional situation
where long-term interest rates rose rapidly in a manner that differed from normal market
developments, the Bank would nimbly conduct operations and other measures. One member
added that, given higher volatility in t he JGB markets, especially for super -long-term, and
continued concerns about supply and demand conditions, it would be necessary in exceptional
circumstances to consider a flexible response, including increasing the amount of JGB
purchases. In relation to this, some members, including this member, expressed the
recognition that it was important that market credibility regarding medium - to long -term
fiscal consolidation be sustained. A different member noted that, while the exact timing and
scale could not be determined, the possibility of a rise in volatility in Japan's bond markets,
as seen recently, could be anticipated. In this regard, the member expressed the view that,
when there is a rise in volatility, it is important for a central bank to examine whether market
functioning is maintained. This member continued that it was crucial that the Bank continue
its efforts to promote understanding of its measures, which it adopts in accordance with its
role and policy objectives. Based on these discussions, mem bers shared the recognition that
it was important for the Bank to carefully monitor developments in the JGB markets, in close
cooperation with the government, based on their respective roles.
IV . Remarks by Government Representatives
The representative from the Ministry of Finance made the following remarks.
(1) The government was closely monitoring recent fluctuations in global and Japanese
markets with utmost vigilance.
(2) In the budget for fiscal 2026, the government kept the degree of overall budgetary
dependence on government bonds at its lowest level since the global financial crisis
subsided. The government would work to obtain approval from the Diet for the budget at
the earliest possible time.
(3) The government expected the Bank to conduct monetary policy as appropriate toward
sustainable and stable achievement of the price stability target of 2 percent, while closely
cooperating with the government, paying due attention to factors such as economic
developments at home and abroad, and communicating effectively with the market.
23
The representative from the Cabinet Office made the following remarks.
(1) The Japanese economy was recovering at a moderate pace, while the effects of U.S. trade
policy had been seen mainly in the automotive industry.
(2) Embracing an approach of "responsible and proactive public finances," the Takaichi
Cabinet would do its utmost to build a "strong Japanese economy" by, for example,
undertaking initiatives related to comprehensive economic measures.
(3) Toward achieving both strong economic growth and stable inflation, it was extremely
important that monetary policy be conducted as appropriate.
(4) The government expected the Bank to conduct monetary policy as appropriate toward
achieving the price stability target of 2 percent in a sustainable and stable manner, while
carefully examining economic and price developments and closely cooperating with the
government in accordance with the spirit of the Bank of Japan Act and of the joint
statement of the government and the Bank.
V . Votes
A. Vote on the Guideline for Money Market Operations
Based on the above discussions, to reflect the majority view of the members, the
chairman formulated the following proposal on the guideline for money market operations.
The Chairman's Policy Proposal on the Guideline for Money Market Operations:
The guideline for money market operations for the intermeeting period will be as follows.
The Bank will encourage the uncollateralized overnight call rate to remain
at around 0.75 percent.
Takata Hajime, however, considered that the price stability target had been more or
less achieved and that, with overseas economies being in a recovery phase, risks to prices in
Japan were skewed to the upside. On this basis, he formulated the following proposal.
24
Takata Hajime's Policy Proposal on the Guideline for Money Market Operations:
The guideline for money market operations for the intermeeting period will be as follows.
The Bank will encourage the uncollateralized overnight call rate to remain
at around 1.0 percent.
Takata Hajime's policy proposal on the guideline for money market operations was
defeated by a majority vote.
V otes for the proposal: TAKATA Hajime.
V otes against the proposal: UEDA Kazuo, HIMINO Ryozo, UCHIDA Shinichi,
NOGUCHI Asahi, NAKAGAWA Junko, TAMURA Naoki, KOEDA Junko, and
MASU Kazuyuki.
The chairman's policy proposal on the guideline for money market operations was
decided by a majority vote.
V otes for the proposal: UEDA Kazuo, HIMINO Ryozo, UCHIDA Shinichi,
NOGUCHI Asahi, NAKAGAWA J unko, TAMURA Naoki, KOEDA Junko, and
MASU Kazuyuki.
V otes against the proposal: TAKATA Hajime.
B. Discussion on the Statement on Monetary Policy
The chairman formulated the Statement on Monetary Policy and put it to a vote. The
Policy Board decided the text by a unanimous vote. It was confirmed that the statement would
be released immediately after the meeting (see Attachment).
VI. Discussion regarding the Outlook Report
Members discussed the draft of "The Bank's View" in the January 2026 Outlook
Report (consisting of "The Bank's View" and "The Background") and formed a majority view.
25
Takata Hajime, however, formulated a proposal that included the following points.
First, with respect to the outlook for prices, he proposed the description stating that, "the level
of the rate of increase in the CPI, including underlying CPI inflation, already seems to have
generally reached the price stability target ." Second, with regard to risks to the outlook, he
proposed the description, " while risks to the outlook include developments in overseas
economic activity and prices under the impact of trade and other policies in each jurisdiction,
wage- and price -setting behavior of firms, and developments in financial and foreign
exchange markets, since the overseas environment is expected to be, during 2026, in a shifting
phase toward recovery, risks regarding the extent to which the overseas environment's shift
toward recovery will spread to prices in Japan are projected to be skewed to the upside." The
proposal was then put to a vote, and was defeated by a majority vote.
V otes for the proposal: TAKATA Hajime.
V otes against the proposal: UEDA Kazuo, HIMINO Ryozo, UCHIDA Shinichi,
NOGUCHI Asahi, NAKAGAWA Junko, TAMURA Naoki, KOEDA Junko, and
MASU Kazuyuki.
Tamura Naoki formulated a proposal that consisted of the following points. First,
with respect to the outlook for underlying CPI inflation, he proposed the descripti on stating
that "from the start of fiscal 2026, underlying CPI inflation is likely to be at a level that is
generally consistent with the price stability target." Second, with regard to medium- to long-
term inflation expectations, he proposed the descripti on, "medium - to long -term inflation
expectations have been rising moderately, and have been at around 2 percent." The proposal
was then put to a vote, and was defeated by a majority vote.
V otes for the proposal: TAMURA Naoki.
V otes against the proposal: UEDA Kazuo, HIMINO Ryozo, UCHIDA Shinichi,
NOGUCHI Asahi, NAKAGAWA Junko, TAKATA Hajime, KOEDA Junko, and
MASU Kazuyuki.
26
To reflect the majority view, the chairman formulated a proposal on "The Bank's
View" and put it to a vote. The Policy Board decided th e text of "The Bank's View" by a
majority vote. It was confirmed that "The Bank's View" would be released immediately after
the meeting. It also was confirmed that the full text of the Outlook Report would be made
public on January 26.
V otes for the proposal: UEDA Kazuo, HIMINO Ryozo, UCHIDA Shinichi,
NOGUCHI Asahi, NAKAGAWA Junko, KOEDA Junko, and MASU Kazuyuki.
V otes against the proposal: TAKATA Hajime and TAMURA Naoki.
VII. Approval of the Minutes of the Monetary Policy Meeting
The Policy Board approved unanimously the minutes of the Monetary Policy
Meeting of December 18 and 19, 2025, for release on January 28, 2026.
27
Attachment
January 23, 2026
Bank of Japan
Statement on Monetary Policy
At the Monetary Policy Meeting held today, the Policy Board of the Bank of Japan decided, by
an 8-1 majority vote, to set the following guideline for money market operations for the
intermeeting period: [Note]
The Bank will encourage the uncollateralized overnight call rate to remain at around 0.75
percent.
[Note] V oting for the action: UEDA Kazuo, HIMINO Ryozo, UCHIDA Shinichi, NOGUCHI Asahi,
NAKAGAW A Junko, TAMURA Naoki, KOEDA Junko, and MASU Kazuyuki. V oting against the
action: TAKATA Hajime. Takata Hajime considered that the price stability target had been more or less
achieved and that, with overseas economies being in a recovery phase, risks to prices in Japan were
skewed to the upside. He proposed that the Bank set the guideline for money market oper ations as
follows: the Bank would encourage the uncollateralized overnight call rate to remain at around 1.0
percent. The proposal was defeated by a majority vote.