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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: Macrobond.
Japan Interest Rate Data
| 2019 | 2020 | 2021 | 2022 | 2023 | |
|---|---|---|---|---|---|
| BOJ Policy Rate (%, eop) | -0.10 | -0.10 | -0.10 | -0.10 | -0.10 |
| TONAR (%, eop) | -0.07 | -0.03 | -0.02 | -0.02 | -0.04 |
| 10-Year Bond Yield (%, eop) | -0.03 | 0.02 | 0.07 | 0.41 | 0.62 |
Central Bank raises interest rates in July
Latest bank decision: At its meeting on 31 July, the Central Bank raised the policy rate to 0.25% from 0.00–0.10%. In addition, the Bank revealed plans to halve its bond purchases.
Monetary policy drivers: Headline and core inflation continue to run above the 2% target and have accelerated so far this year. This, coupled with a weak yen and rising wage pressures, likely persuaded the Bank to hike.
Policy outlook: The Central Bank indicated that it would likely continue to raise the policy interest rate going forward. That said, the Bank is set to proceed cautiously, and our Consensus is for only mild monetary tightening by the end of this year.
Panelist insight: On the outlook, Nomura analysts said: “In our new main scenario, the BOJ implements another rate hike at the April 2025 MPM (30 April-1 May) by raising the policy rate from 0.25% to 0.50%. This scenario corresponds to the case where the BOJ further increases its confidence in a virtuous cycle between wages and prices based on next year’s shunto (spring wage negotiations).” United Overseas Bank’s Alvin Liew sees the next hike coming sooner: “We now expect the BOJ to stay on the rate tightening trajectory although it may not be a continuous cycle and likely to be a limited normalisation path. We expect BOJ to keep its policy rates unchanged in the next Sep 2024 MPM, and the next hike may come in 4Q24, via a 25-bps hike to 0.50% which we believe will be the terminal rate.”
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 26 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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