Bank of Japan lifts the policy rate to around 1.25 per cent
The Policy Board voted 7-2 to encourage the uncollateralized overnight call rate to remain at around 1.25 per cent. The complementary deposit rate is also 1.25 per cent, while the basic loan rate is 1.5 per cent. The new guideline takes effect on 24 September 2026. Asada Toichiro dissented, saying CPI excluding fresh food had recently been below 2 per cent. Sato Ayano dissented, saying price and activity developments had not substantially accelerated. The Bank said financial conditions should stay accommodative after the change.
Economics & Markets··Midday
A 7-2 vote
The Bank of Japan's 18 September decision said the Policy Board voted 7-2 to encourage the uncollateralized overnight call rate to remain at around 1.25 per cent. The complementary deposit facility rate is also 1.25 per cent. The basic loan rate is 1.5 per cent. The new guideline takes effect on 24 September 2026. Al Jazeera’s Friday report placed the same move as a rise from 1 percent to 1.25 percent, the highest in 31 years, and called the 0.25 point step the first hike since June.[1], [2]
Two dissents
Asada Toichiro dissented, saying CPI excluding fresh food had recently been below 2 per cent and the economy could not necessarily be described as strong. Sato Ayano dissented, saying economic and price developments did not appear to have substantially accelerated and a rate rise was not appropriate now. The Bank’s own decision text names Asada and Sato as the two no votes. Al Jazeera’s retained card does not reprint those dissent memos; it stays with the headline rate and the 31-year frame.[1]
Still accommodative
The Bank said financial conditions have been accommodative and are expected to remain so after the policy-rate change, continuing to support activity. The hike is a guideline change, not a claim that Japan has left easy money behind. Al Jazeera said the hike takes Japanese rates closer to what the Bank deems neutral and another step away from decades of ultra-low policy that made the yen cheap funding. The Bank’s own text still calls conditions accommodative after the change.[1], [2]
