Bank of Japan Press conference comparison — 23 January 2026 vs 19 March 2026
This Bank of Japan press conference comparison covers 23 January 2026 and 19 March 2026. Overall, the newer document was more dovish. The Bank of Japan held its policy rate at 0.75% again, and the overall direction of travel has shifted from a confident, near-term tightening path toward a more cautious and delayed one, driven by Middle East tensions, oil-price uncertainty, and a noted decline in the Board's confidence that its inflation outlook will be realised. This signals that the next move is more likely to be another hold at the April meeting unless the spring…
What changed
More dovish. The Bank of Japan held its policy rate at 0.75% again, and the overall direction of travel has shifted from a confident, near-term tightening path toward a more cautious and delayed one, driven by Middle East tensions, oil-price uncertainty, and a noted decline in the Board's confidence that its inflation outlook will be realised. This signals that the next move is more likely to be another hold at the April meeting unless the spring wage results and a stronger pass-through to underlying prices force the Bank's hand earlier than currently signalled.
- Inflation — More dovish. The prior document framed inflation as firmly mid-2% with upside pass-through risk and an explicit cap on overshoot, whereas the current document tempers this by projecting a temporary dip below 2%, citing anchored expectations as room to look through oil-driven spikes, and noting the Bank is 'still some distance' from 2% — even as it adds new upside cautions on stronger-than-2022 passthrough.
- Labour Market — Little changed. Both documents retain the same wage-price mechanism and intensifying labour-shortage framing; the current one adds spring wage negotiations and small-firm wage spread as monitoring points, but this refines rather than changes the hawkish labour narrative.
- Rate Path — More dovish. The retained conditional hike bias and new hawkish touches (below-Taylor-rule policy rate, willingness to tighten pre-emptively, keeping a hike on the table despite a growth slowdown) are outweighed by the shift from confident forward-guidance to caution — confidence that the outlook will be realised 'has declined somewhat,' Middle East tensions are explicitly delaying tightening, and a financial-stability caveat has been added to the reaction function.
- Balance Sheet — Little changed. No balance-sheet or JGB-operation passage appears in the current signal set, so the prior document's watch-and-coordinate stance on unstable super-long bond supply-demand is effectively carried over with no new signal.
Key wording
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.
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.
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.
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.
At present, we observe that firms' price- and wage-setting behavior has recently become more active, and under these circumstances, I would like to carefully monitor the possibility that the degree of pass-through to domestic prices and the degree of response of domestic prices to import prices may be increasing, and I would also like to pay attention to the possibility that domestic prices moving in this way may affect inflation expectations and thereby also affect underlying prices.
At today's Monetary Policy Meeting, we decided by majority vote to maintain the guideline for money market operations of encouraging the uncollateralized overnight call rate to remain at around 0.75 percent. In addition, Member Takata proposed a motion to raise the policy interest rate to around 1.0 percent, 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 inflation, but the motion was rejected by majority vote.
As for the outlook, as the effects of rising prices of food items such as rice diminish, and with the effects of the government's measures against high prices, the year-on-year rate of change in the consumer price index excluding fresh food is expected to shrink its positive margin to below 2 percent for a time, and thereafter the effects of the recent rise in crude oil prices will work in the direction of expanding the positive margin.
During this period, the mechanism in which wages and prices rise moderately while referencing each other is expected to be maintained, and thereafter, as the economy continues to improve and labor shortage feelings intensify, medium- to long-term inflation expectations are expected to rise.
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 the trade policies of various countries, firms' wage and price-setting behavior, and financial and foreign exchange market movements, and it is necessary to pay sufficient attention to their impact on Japan's economy and prices.
In conducting monetary policy, given that the current real interest rate is at a very low level, if the economic and price outlook as described above is realized, it is thought 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.
On the other hand, if the rise in crude oil prices or the yen's depreciation leads to a rise in people's medium- to long-term inflation expectations, that is thought to work to push up the underlying rate of inflation.
Official documents
Background reading
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23 January 2026 press conference · 19 March 2026 press conference · Earlier meeting · Later meeting · Previous comparison · Next comparison · Methodology
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