The Bank of Japan (BoJ) board members shared their views on the monetary policy outlook on Wednesday, per the BoJ Minutes of the December meeting.
Key quotes
The BoJ maintained the uncollateralized overnight call rate around 0.25% as per its previous guideline.
Government bond purchases continued as planned, with monthly JGB purchases of ¥4.9 trillion.
The Japanese economy showed moderate recovery, supported by improving corporate profits and stable employment, though some weakness remains.
Inflation remains in the 2.0-2.5% range, supported by rising services prices and wage growth, though the impact of past import price increases has faded.
The BoJ reviewed its long-term monetary policy since the late 1990s, acknowledging both benefits and side effects of large-scale monetary easing.
Policymakers discussed the importance of sustainable inflation near 2%, emphasizing the need for cautious adjustments to monetary policy.
While some members pushed for an interest rate hike to 0.5%, the majority voted to keep rates unchanged at 0.25%, citing uncertainties in wage growth and global economic conditions.
The BoJ reaffirmed its cautious approach, stating that any future policy adjustments will depend on inflation trends, wage growth, and global economic risks.
The BoJ policy statement was unanimously approved, confirming continued monetary easing while monitoring inflation and financial stability.
Market reaction to the BoJ Minutes
At the time of writing, USD/JPY was up 0.04% on the day at 155.58.
Bank of Japan FAQs
The Bank of Japan (BoJ) is the Japanese central bank, which sets monetary policy in the country. Its mandate is to issue banknotes and carry out currency and monetary control to ensure price stability, which means an inflation target of around 2%.
The Bank of Japan embarked in an ultra-loose monetary policy in 2013 in order to stimulate the economy and fuel inflation amid a low-inflationary environment. The bank’s policy is based on Quantitative and Qualitative Easing (QQE), or printing notes to buy assets such as government or corporate bonds to provide liquidity. In 2016, the bank doubled down on its strategy and further loosened policy by first introducing negative interest rates and then directly controlling the yield of its 10-year government bonds. In March 2024, the BoJ lifted interest rates, effectively retreating from the ultra-loose monetary policy stance.
The Bank’s massive stimulus caused the Yen to depreciate against its main currency peers. This process exacerbated in 2022 and 2023 due to an increasing policy divergence between the Bank of Japan and other main central banks, which opted to increase interest rates sharply to fight decades-high levels of inflation. The BoJ’s policy led to a widening differential with other currencies, dragging down the value of the Yen. This trend partly reversed in 2024, when the BoJ decided to abandon its ultra-loose policy stance.
A weaker Yen and the spike in global energy prices led to an increase in Japanese inflation, which exceeded the BoJ’s 2% target. The prospect of rising salaries in the country – a key element fuelling inflation – also contributed to the move.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
AUD/USD gains ground above 0.6300 ahead of Chinese data
The AUD/USD pair gathers strength to near 0.6325 during the early Asian session on Monday. The uptick of the pair is bolstered by the weaker US Dollar and special plans from the Chinese government to boost consumption and raise incomes.
EUR/USD: A move to 1.1000 re-emerges on the horizon
EUR/USD enjoyed a broadly upbeat run last week, extending its strong recovery and briefly surpassing the 1.0900 handle to reach multi-month highs. Although the rally lost some momentum as the week wore on, the pair still ended with a solid performance on the weekly chart.
Gold: Bulls act on return of risk-aversion, lift XAU/USD to new record-high
Gold capitalized on safe-haven flows and set a new record high above $3,000. The Fed’s policy announcements and the revised dot plot could influence Gold’s valuation. The near-term technical outlook suggests that the bullish bias remains intact.
Week ahead: Central banks in focus amid trade war turmoil
Fed decides on policy amid recession fears.Yen traders lock gaze on BoJ for hike signals. SNB seen cutting interest rates by another 25bps. BoE to stand pat after February’s dovish cut.
Week ahead – Central banks in focus amid trade war turmoil
Fed decides on policy amid recession fears. Yen traders lock gaze on BoJ for hike signals. SNB seen cutting interest rates by another 25bps. BoE to stand pat after February’s dovish cut.
The Best brokers to trade EUR/USD
SPONSORED Discover the top brokers for trading EUR/USD in 2025. Our list features brokers with competitive spreads, fast execution, and powerful platforms. Whether you're a beginner or an expert, find the right partner to navigate the dynamic Forex market.