Bank of Japan Press conference comparison — 31 July 2025 vs 19 September 2025

This Bank of Japan press conference comparison covers 31 July 2025 and 19 September 2025. Overall, the newer document was mixed. The current document shows a mild hawkish shift via rate path dissent and balance sheet tightening, but inflation and labour market assessments have softened. The next decision likely hinges on data through early next year, with a hike possible if downside risks do not materialize.

What changed

Mixed. The current document shows a mild hawkish shift via rate path dissent and balance sheet tightening, but inflation and labour market assessments have softened. The next decision likely hinges on data through early next year, with a hike possible if downside risks do not materialize.

Inflation — More dovish. Current statement stresses that underlying inflation remains below 2% and that food inflation is temporary, a softer tone than prior's conviction that inflation would gradually reach target.
Labour Market — More dovish. No explicit labour market mention in current statement, a notable omission from prior's emphasis on tight labour market and wage norms.
Rate Path — More hawkish. Two members dissented for a hike, a more hawkish internal split than prior; however the majority held rates steady citing downside risks.
Balance Sheet — More hawkish. BOJ decided to begin ETF disposal, a clear hawkish balance sheet move absent in prior document.

Key wording

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.

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.

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.

labor supply and demand continue to be tight, and under these conditions, the movement to pass wage increases through to sales prices is continuing.
labour market: Tight labor market supports wage-price spiral narrative, underpinning rate hike case.

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.

19 September 2025

we decided by a majority vote to maintain the existing policy of encouraging the uncollateralized overnight call rate to remain at around 0.5%.
rate path: Policy rate held at 0.5% as expected; no surprise.

the year-on-year rate of change in the consumer price index (excluding fresh food) is currently in the upper 2% range, due to the continued pass-through of wage increases to selling prices and the impact of rising food prices such as rice.
inflation: Inflation remains above target but driven by one-off factors; underlying pressure uncertain.

Member Takada submitted a proposal to raise the policy interest rate to around 0.75%, arguing that the norm of prices not rising has shifted and that the achievement of the price stability target has been broadly attained. Member Tamura also submitted a proposal to raise the policy rate to around 0.75%, citing the need to move closer to the neutral interest rate amid growing upside risks to prices.
rate path: Two members dissented in favor of a hike, signaling internal pressure to normalize.

There are various risk factors surrounding this outlook, but in particular, uncertainty regarding future developments in trade policies of various countries and their impact on overseas economic and price developments remains high, and it is necessary to pay close attention to their impact on financial and foreign exchange markets and Japan's economy and prices.
rate path: Trade policy uncertainty remains a key risk; BoJ is on hold pending clarity.

my assessment is that it is still slightly below that, but in the process of approaching 2%.
inflation: Governor sees inflation below target but converging, justifying cautious stance.

Therefore, for example, if food inflation declines and short-term household inflation expectations calm down accordingly, that does not necessarily mean it is negative for achieving our price stability target.
inflation: Dismisses decline in short-term inflation expectations as benign, reduces urgency to tighten.

Official documents

Background reading

31 July 2025 press conference · 19 September 2025 press conference · Earlier meeting · Later meeting · Previous comparison · Next comparison · Methodology