Bank of Japan Press conference comparison — 17 June 2025 vs 31 July 2025

This Bank of Japan press conference comparison covers 17 June 2025 and 31 July 2025. Overall, the newer document was more hawkish. The July document shifts hawkishly on inflation, labour, and rate path, with stronger conviction on the wage-price spiral and reduced deflation risk. The BOJ maintains a conditional hiking bias but remains data-dependent; near-term rate hike is not imminent but the door is open for later this year if the outlook holds.

What changed

More hawkish. The July document shifts hawkishly on inflation, labour, and rate path, with stronger conviction on the wage-price spiral and reduced deflation risk. The BOJ maintains a conditional hiking bias but remains data-dependent; near-term rate hike is not imminent but the door is open for later this year if the outlook holds.

Inflation — More hawkish. The current document introduces multiple hawkish inflation signals—long-term convergence to 2%, reduced deflation risk, and second-round effects—whereas prior document was predominantly dovish, emphasizing temporary factors and lack of anchoring.
Labour Market — More hawkish. Labor market rhetoric shifts from dovish concerns about tariff impact on wages to hawkish emphasis on tightness and structural wage hikes.
Rate Path — More hawkish. Rate path rhetoric maintains conditional commitment to future hikes but adds stronger emphasis on wage-price spiral condition and upside inflation risks, marking a hawkish shift from the prior's cautious and dovish tone.
Balance Sheet — Little changed. Balance sheet rhetoric is limited to a neutral comment on ETF disposal; no active tightening or loosening signals compared to prior's detailed QT discussions, implying no directional shift.

Key wording

17 June 2025

Regarding the monetary market operations policy, we decided unanimously to maintain the current policy of encouraging the uncollateralized overnight call rate to remain around 0.5%.
rate path: Rate held at 0.5% as expected; no surprise.

As a result, we decided by a majority vote to reduce the monthly planned purchase amount by approximately 400 billion yen per quarter until March 2026, and by approximately 200 billion yen per quarter from April to June 2026 onwards, with the goal of reaching approximately 2 trillion yen by January-March 2027.
balance sheet: Gradual QT path announced; pace slows after March 2026.

Member Tamura submitted a proposal to reduce the monthly planned purchase amount by approximately 400 billion yen per quarter through January-March 2027, arguing that the formation of long-term interest rates should be left to the market and its participants; however, this proposal was rejected by a majority vote.
balance sheet: Hawkish dissenter wanted faster QT; signals internal division.

There are various risk factors surrounding the outlook, but uncertainty is extremely high, particularly regarding the future development of trade policies in various countries and the resulting trends in overseas economies and prices. We must closely monitor the impact on financial and foreign exchange markets, as well as on the Japanese economy and prices.
inflation: High uncertainty on trade and FX; cautious tone on rate path.

if the aforementioned economic and price outlook is realized, we believe we will continue to raise the policy interest rate and adjust the degree of monetary easing in response to improvements in economic and price conditions.
rate path: Conditional commitment to further rate hikes if outlook holds.

we judged it appropriate to continue the reduction of 400 billion yen [per quarter] until January-March of next year, and from April 2026 onwards, reduce the monthly planned purchase amount by 200 billion yen [per quarter], reaching approximately 2 trillion yen by January-March 2027.
balance sheet: BOJ slows pace of JGB purchase reduction, signaling caution about market stability and keeping accommodation longer.

31 July 2025

we decided unanimously to maintain the monetary market operation policy of conducting operations to encourage the uncollateralized overnight call rate to remain at around 0.5%.
rate path: No change in policy rate, as expected.

Well, I would like to prioritize thinking about whether there is an appropriate method consistent with the principles I have always stated. I do not think it is necessarily good to think about getting it done at all costs within my own term.
balance sheet: ETF disposal not a near-term priority; no urgency to tighten balance sheet.

the underlying rate of increase in consumer prices is expected to struggle to grow due to the impact of the slowing pace of economic growth.
inflation: Underlying inflation weak despite headline above target; supports cautious approach.

Regarding the risk balance for the economy, taking into account the influence of trade policies in various countries, we view the downside risks as being larger for fiscal 2025 and 2026, similar to the previous Outlook Report. We view the risk balance for the price outlook as being generally balanced between upside and downside.
rate path: Downside risks to growth, balanced risks to prices; may slow pace of hikes.

As for the outlook, the underlying rate of price increase is expected to struggle to grow for a while due to the impact of the slowing pace of economic growth.
inflation: Near-term inflation weakness due to slowing growth, delaying any urgency to hike.

given that current real interest rates are at an extremely low level, if the aforementioned economic and price outlooks are realized, we believe that we will continue to raise the policy interest rate and adjust the degree of monetary easing in response to improvements in economic and price conditions.
rate path: Signals future rate hikes if outlook holds; reinforces tightening bias.

Official documents

Background reading

17 June 2025 press conference · 31 July 2025 press conference · Earlier meeting · Later meeting · Next comparison · Methodology