Bank of Japan Press conference comparison — 19 December 2025 vs 19 March 2026
This Bank of Japan press conference comparison covers 19 December 2025 and 19 March 2026. Overall, the newer document was more dovish. The Bank has moved from December's unanimous hike to a majority-vote hold at 0.75%, citing a new Middle East and crude-oil risk scenario and a modest decline in confidence that its outlook will be realised, while still promising to keep raising rates if that outlook holds. The next move hinges on the April Outlook Report and the spread of spring wage gains to smaller firms, and with one member already voting for 1.0% the…
What changed
More dovish. The Bank has moved from December's unanimous hike to a majority-vote hold at 0.75%, citing a new Middle East and crude-oil risk scenario and a modest decline in confidence that its outlook will be realised, while still promising to keep raising rates if that outlook holds. The next move hinges on the April Outlook Report and the spread of spring wage gains to smaller firms, and with one member already voting for 1.0% the pause reads as a delay in normalisation rather than its end.
- Inflation — Little changed. Inflation is still anchored to above-2% CPI on wage pass-through, but December's straightforward hawkish read is now balanced by explicit measurement uncertainty on underlying inflation, the 'still some distance to go' caveat, and an unresolved oil-shock pass-through debate deferred to the April Outlook.
- Labour Market — Little changed. December's 'tight labour supply and resilient profits' framing is replaced by a judgement that spring wage talks are producing a 'solid outcome', with SME wage diffusion flagged as the remaining test — supportive of normalisation but no stronger than the prior document.
- Rate Path — More dovish. Guidance shifted from December's unanimous hike and explicit readiness to raise again to a majority-vote hold at 0.75%, with the Bank conceding its confidence in the outlook has 'declined somewhat' — a step back in direction of travel even though a conditional hiking bias is retained and a risk-based pre-emptive move is left on the table.
- Balance Sheet — Little changed. December's operational flexibility on JGB purchases and the early-summer review gives way to a general statement that asset-price and financial-stability effects are monitored but are not currently a policy constraint — no directional change.
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%.
In addition, in forecasting the future development of the underlying rate of inflation, for the time being we would like to examine the status of wage increases in the spring wage negotiations and firms' price-raising movements, and confirm whether the mechanism by which wages and prices rise sustainably is operating.
In addition, Member Takata proposed a bill to raise the policy interest rate to around 1.0%, arguing that the price stability target has been broadly achieved and that the risk of domestic inflation overshooting is high due to second-round effects of overseas-originated price increases, but the proposal 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) has been running above 2%, reflecting the continued pass-through of wage increases to selling prices and the impact of rising food prices such as rice, but recently it has declined to around 2% due to the effects of the government's measures to ease the energy burden.
Risk factors surrounding the outlook include future developments in the Middle East situation and crude oil price movements, overseas economic and price developments affected by each country's trade policies, firms' wage and price-setting behavior, and financial and foreign exchange market developments, and it is necessary to pay sufficient attention to their impact on Japan's economy and prices.
Given that the current real interest rate is at a very low level, if the economic and price outlook 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.
Official documents
Background reading
Related
19 December 2025 press conference · 19 March 2026 press conference · Earlier meeting · Later meeting · Previous comparison · Next comparison · Methodology
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