Bank of Japan Press conference comparison — 30 October 2025 vs 19 December 2025
This Bank of Japan press conference comparison covers 30 October 2025 and 19 December 2025. Overall, the newer document was more hawkish. The Bank of Japan has moved from holding at 0.5% with a hawkish minority pushing for action to delivering a unanimous hike to 0.75%, backed by rising underlying inflation, a tight labour market and diminishing external uncertainty. This signals the tightening cycle is firmly underway rather than a one-off adjustment, with further increases explicitly left on the table should wages keep feeding into prices — though the Bank retains a meeting-by-meeting, data-dependent approach.
What changed
More hawkish. The Bank of Japan has moved from holding at 0.5% with a hawkish minority pushing for action to delivering a unanimous hike to 0.75%, backed by rising underlying inflation, a tight labour market and diminishing external uncertainty. This signals the tightening cycle is firmly underway rather than a one-off adjustment, with further increases explicitly left on the table should wages keep feeding into prices — though the Bank retains a meeting-by-meeting, data-dependent approach.
- Inflation — More hawkish. The inflation assessment flipped from expecting price growth to narrow below 2% amid fading food-price effects to describing the underlying rate as continuing to rise moderately on wage pass-through, with yen weakness now flagged as an upside risk.
- Labour Market — More hawkish. Labour-market signals remain hawkish in both documents, but the emphasis moves from merely seeking early evidence of wage momentum to describing tight supply-demand conditions and high corporate profits as solid underpinnings for next year's wage round.
- Rate Path — More hawkish. The stance shifts decisively from a hold at 0.5% with two dissenting hike votes and no pre-commitment to a unanimous increase to 0.75%, with further moves explicitly conditioned on the outlook being realised while real rates stay deeply negative.
- Balance Sheet — Little changed. Only the current document addresses the balance sheet, flagging operational flexibility should JGB yields move abnormally and a regular review of bond purchases in early summer — informational rather than directional for policy.
Key wording
At today's meeting, first, we decided by a majority vote to maintain the monetary market operation guideline of encouraging the uncollateralized overnight call rate to remain at around 0.5 percent.
Member Takata submitted a proposal to raise the policy interest rate to around 0.75 percent, stating that the norm of prices not rising has shifted and that the achievement of the price stability target has been broadly attained, and Member Tamura also submitted a proposal to raise the policy rate to around 0.75 percent, stating that, with upside risks to prices expanding, it is appropriate to move somewhat closer to the neutral interest rate; however, both proposals were rejected by a majority vote.
Looking ahead, as the impact of rises in food prices such as rice diminishes, the year-on-year rate of change in the CPI excluding fresh food is likely to see its positive margin narrow to below 2 percent through the first half of the next fiscal year.
Regarding the risk balance for the economic outlook, taking into account the impact of trade policies of various countries, downside risks are considered larger for fiscal 2026. The risk balance for the price outlook is broadly balanced between upside and downside, as in the previous Outlook Report.
Given that the current real interest rate is at an extremely low level, if the above economic and price outlook is realized, we think that, in line with improvements in economic activity and prices, the Bank will continue to raise the policy interest rate and adjust the degree of monetary accommodation.
Regarding Japan's consumer prices, developments so far have been along the lines of the baseline scenario, in which the impact of food price rises diminishes while the underlying rate of price increases rises moderately, and we do not recognize that concerns about falling behind the curve are currently increasing.
At today's meeting, regarding the guideline for money market operations, we decided unanimously to change the target for the uncollateralized call rate overnight, which is the policy interest rate, from the previous approximately 0.5% to approximately 0.75%.
Meanwhile, uncertainty remains regarding the impact of the U.S. economy and various countries' trade policies, but it is declining.
Looking at prices, with the pass-through of wage increases to selling prices continuing, the underlying rate of increase in consumer prices continues to rise moderately.
Regarding future monetary policy conduct, given that the current real interest rate is at an extremely low level, if the economic and price outlook presented in the Outlook Report is realized, we believe that we will continue to raise the policy interest rate in accordance with improvements in economic and price conditions and adjust the degree of monetary easing.
Given this, we believe it is appropriate to continue to examine the response of the economy and prices to changes in short-term interest rates and to adjust the degree of monetary easing while exploring the level of the neutral interest rate from such observations.
As for how exchange rate considerations influenced today's decision, please look at the Summary of Opinions for details, but I would like to note that multiple members pointed out that the recent weak yen is having an upward impact on import prices and, through pass-through, on domestic prices, or may have such an impact going forward, and that in some cases it may affect underlying prices, and that this needs to be monitored.
Official documents
Background reading
Related
30 October 2025 press conference · 19 December 2025 press conference · Earlier meeting · Later meeting · Previous comparison · Next comparison · Methodology
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