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 broadly unchanged. After December's hike the Bank held rates steady, keeping its gradual tightening bias intact while shifting the framing toward a broader, less urgent, data-dependent approach rather than signalling a quick follow-up move. Above-target inflation and two members pushing for an earlier increase keep the next hike live, but balanced risks and still-soft service-price inflation suggest the Bank is content to wait for clearer wage and price evidence before acting again.
What changed
Broadly unchanged. After December's hike the Bank held rates steady, keeping its gradual tightening bias intact while shifting the framing toward a broader, less urgent, data-dependent approach rather than signalling a quick follow-up move. Above-target inflation and two members pushing for an earlier increase keep the next hike live, but balanced risks and still-soft service-price inflation suggest the Bank is content to wait for clearer wage and price evidence before acting again.
- Inflation — Little changed. Inflation remains above target at mid-2% with active wage/price pass-through, but the prior document's hawkish yen-driven upside emphasis is replaced by a dovish caveat that Japanese service prices still lag other advanced economies and a note that the price outlook is 'broadly the same.'
- Labour Market — Little changed. Both documents describe tight conditions and rising wage pressure — the current one via an 'intensifying sense of labor shortage' and higher medium-to-long-term inflation expectations — so no directional shift in the labour-market framing.
- Rate Path — Little changed. The conditional commitment to keep raising rates if the outlook is realised is carried over verbatim, but the framing softens from 'pressing on with normalisation' to a hold with balanced risks, a broader indicator set, and an explicit downplaying of April as decisive.
- Balance Sheet — Little changed. Both treat balance-sheet policy as a watch-and-coordinate matter, with the current document flagging unstable super-long JGB supply-demand and readiness for flexible operations but committing to no immediate action.
Key wording
At today's meeting, regarding the conduct of money market operations, the Bank decided unanimously to change the target for the uncollateralized overnight call rate, which is the policy interest rate, from around 0.5 percent to around 0.75 percent.
To summarize the environment surrounding wages, labor market conditions have remained tight, and corporate profits are expected to remain at high levels overall, even taking into account the effects of tariff policies.
Meanwhile, uncertainty regarding the effects of the U.S. economy and various countries' trade policies continues to remain, but it has diminished.
On the price front, with the pass-through of wage increases to selling prices continuing, the underlying rate of increase in consumer prices has continued to rise moderately.
Regarding the future conduct of monetary policy, 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, the Bank will continue to raise the policy interest rate and adjust the degree of monetary accommodation in line with improvements in economic and price conditions.
With this in mind, the Bank considers it appropriate to continue to examine the response of the economy and prices to changes in short-term interest rates, explore the level of the neutral interest rate from such observations, and adjust the degree of monetary accommodation.
At today's Monetary Policy Meeting, we decided by majority vote to maintain the guideline for money market operations of encouraging the uncollateralized call rate (overnight) to remain at around 0.75%. Member Takata proposed a motion to raise the policy interest rate to around 1.0%, on the grounds that the price stability target has been broadly achieved, the overseas economy is in a recovery phase, and the upside risks to domestic prices are high, but the motion was rejected by majority vote.
Thereafter, with the sense of labor shortage intensifying as the economy continues to improve and medium- to long-term inflation expectations rising, both the underlying rate of inflation and the rate of increase in the CPI (all items less fresh food) are expected to gradually increase, and are projected to be at levels broadly consistent with the price stability target in the latter half of the projection period.
As for the balance of risks, we consider that the outlook for both economic activity and prices is broadly balanced on the upside and downside.
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, due to the effects of rising prices of food items such as rice, while the pass-through of wage increases to selling prices continues.
In conducting monetary policy, 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 we will continue to raise the policy interest rate and adjust the degree of monetary accommodation in accordance with improvements in economic and price conditions.
However, based on the thinking as of December, we raised the policy interest rate because the possibility that the price outlook we had held up to that point would be realized had gradually increased.
Official documents
Background reading
Related
19 December 2025 press conference · 23 January 2026 press conference · Earlier meeting · Later meeting · Previous comparison · Next comparison · Methodology
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