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April 29, 2026BANK OF JAPAN MONETARY POLICY The Policy Board of the Bank of Japan continues to maintain the uncollateralized overnight call rate around 0.75%.
In its outlook, the Bank of Japan expects that economic growth will decelerate in 2026. Higher crude oil prices due to the conflict in the Middle East are expected to lower corporate profits (though these remain elevated) and household real incomes along with a deterioration in the terms of trade. Government measures and accommodative financial conditions are expected to offset some of these downward pressures. The Bank of Japan expects that adverse effects of higher oil prices will fade in 2027, allowing a virtuous cycle of higher income and expenditures to re-emerge. Japan's underlying inflation index (excluding fresh food and energy) is projected to rise by 2.5-3.0% in 2026, slowing to 2.0-2.5% in 2027 and stabilizing at a growth rate of 2.0% per year thereafter. Japan's risk profile is negative (lower GDP, higher prices), particularly in the event of prolonged turmoil in the Middle East.
The Bank of Japan will continue to raise the policy interest rate and adjust the degree of monetary accommodation, given that inflation has been approaching 2% and the real interest rate remains very low. The Bank will respond to developments in economic activity and prices, as well as financial conditions, to sustainably achieve the price stability (2%) target.
The Bank will release their next monetary policy statement on June 16, 2026.
Source: Bank of Japan, Statement on Monetary Policy; Outlook for Economic Activity and Prices
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