Bank of Japan Press conference comparison — 19 December 2025 vs 23 January 2026
This Bank of Japan press conference comparison covers 19 December 2025 and 23 January 2026. Overall, the newer document was more hawkish. The Bank has moved from December's unanimous hike to a January pause, but the tightening bias is intact: further increases remain the baseline if the outlook is realised, and the internal debate has visibly moved toward those who want to go faster. With inflation still in the mid-2% range, wage pass-through broadening and one member already voting for 1.0%, the next meeting is live, and the decision will hinge on whether the Board judges…
What changed
More hawkish. The Bank has moved from December's unanimous hike to a January pause, but the tightening bias is intact: further increases remain the baseline if the outlook is realised, and the internal debate has visibly moved toward those who want to go faster. With inflation still in the mid-2% range, wage pass-through broadening and one member already voting for 1.0%, the next meeting is live, and the decision will hinge on whether the Board judges the price outlook realisation as firm enough to act rather than whether further tightening is warranted.
- Inflation — More hawkish. The inflation read has firmed relative to December: core CPI is described as holding in the mid-2% range with wage pass-through continuing, the Board sees greater certainty of reaching 2% than it did in October, and fiscal measures are explicitly judged to support underlying prices, while the Governor says policy will lean against any significant overshoot.
- Labour Market — More hawkish. The wage-price linkage is characterised more strongly than in December, with a significantly rising number of survey responses citing wage pass-through as a reason for raising prices, reinforcing the condition for further tightening.
- Rate Path — Little changed. Forward guidance is a pause rather than a reversal — the 0.75% rate was held by majority vote with one member dissenting for an immediate move to 1.0%, risks are now described as broadly balanced rather than tilted by declining downside risk, April price revisions are played down as a single trigger, and the stated bias to keep raising rates if the outlook is realised is retained.
- Balance Sheet — Little changed. The operational stance is unchanged and remains a conditional flexibility signal — the Bank repeats it would act on disorderly long-end moves, but with super-long supply-demand described as unstable and volatility high, it only commits to monitoring for now, implying tolerance for higher long yields.
Key wording
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%.
Organizing the environment surrounding wages, the tight labor supply-demand situation continues, and corporate profits are expected to remain at a high level overall even after factoring in the effects of tariff policies.
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.
At today's meeting, the Policy Board decided by a majority vote to maintain the guideline for market operations of encouraging the uncollateralized overnight call rate to remain at around 0.75%.
But now, for example, in hearing results, the number of responses citing wage pass-through as a reason for price increases seems to be increasing significantly.
Member Takata proposed a motion to raise the policy interest rate to around 1.0%, arguing that the price stability target has been broadly achieved and that, with overseas economies in a recovery phase, the upside risks to domestic prices are high, but the motion was rejected by a majority vote.
Regarding prices, the year-on-year rate of change in the consumer price index (CPI, all items less fresh food) is currently in the mid-2% range, reflecting the effects of rising food prices such as rice, while the pass-through of wage increases to selling prices continues.
Regarding the risk balance, we consider that the outlook for both economic activity and prices is broadly balanced on the upside and downside.
Given that the current real interest rate is at a very low level, if the outlook for economic activity and prices described above is realized, we believe that the Bank will continue to raise the policy interest rate and adjust the degree of monetary accommodation in accordance with improvements in economic and price conditions.
Official documents
Background reading
Related
19 December 2025 press conference · 23 January 2026 press conference · Earlier meeting · Later meeting · Previous comparison · Next comparison · Methodology
The Cadence Brief
The one number that moved central bank pricing — delivered each weekday morning.