--- source: Bank of Japan url: https://www.boj.or.jp/en/mopo/mpmdeci/mpr_2026/k260319a.pdf document_type: pdf date_retrieved: 2026-03-19 period: March 19, 2026 parent_publication: Monetary Policy Meeting Statement indicators_covered: [Interest Rate, Monetary Policy Stance] --- # Bank of Japan Statement on Monetary Policy **Release Date:** March 19, 2026 ## Policy Decision At the Monetary Policy Meeting held on March 18-19, 2026, the Policy Board of the Bank of Japan decided, **by an 8-1 majority vote**, to set the following guideline for money market operations: **The Bank will encourage the uncollateralized overnight call rate to remain at around 0.75 percent.** ### Voting **Voting for the action (8 members):** - UEDA Kazuo (Chairman/Governor) - HIMINO Ryozo (Deputy Governor) - UCHIDA Shinichi (Deputy Governor) - NOGUCHI Asahi - NAKAGAWA Junko - TAMURA Naoki - KOEDA Junko - MASU Kazuyuki **Voting against (1 member):** - **TAKATA Hajime** — proposed raising the policy interest rate to around 1.0 percent, arguing that the price stability target had been more or less achieved and that risks to prices in Japan were skewed to the upside due to second-round effects of price rises from overseas developments. --- ## Economic Assessment ### Current Conditions Japan's economy has **recovered moderately, although some weakness has been seen in part**. Key developments: - **Overseas economies** have grown moderately on the whole, with some weakness due to trade and other policies in each jurisdiction. - **Exports and industrial production** have continued to be more or less flat as a trend. - **Corporate profits** have remained at high levels on the whole, although downward effects due to tariffs have been seen in manufacturing. - **Business fixed investment** has been on a moderate increasing trend. - **Private consumption** has been resilient, supported by an improvement in the employment and income situation, although it has been affected by price rises. - **Housing investment** has been on a declining trend. - **Public investment** has continued to be more or less flat. - **Financial conditions** have been accommodative. ### Price Dynamics - The year-on-year rate of increase in the **consumer price index (CPI, all items less fresh food)** had been above 2 percent, partly due to the effects of the rise in food prices such as rice prices. - The rate of increase has **recently fallen to around 2 percent** due to factors such as the effects of government measures to reduce the household burden of higher energy prices. - **Inflation expectations** have risen moderately. - **Wage-to-price dynamics**: Moves to pass on wage increases to selling prices are continuing. --- ## Economic Outlook ### Baseline Projection Japan's economy is likely to **continue growing moderately**, with the following drivers and constraints: **Positive factors:** - Overseas economies returning to a growth path - Virtuous cycle from income to spending gradually intensifying - Government's economic measures and accommodative financial conditions **Downside risks:** - Trade and other policies in each jurisdiction - **Increased tension over the situation in the Middle East**, with global financial and capital markets experiencing volatility and crude oil prices rising significantly ### Inflation Outlook The year-on-year rate of increase in CPI (all items less fresh food) is likely to: 1. **Temporarily decelerate to a level below 2 percent**, with the waning of the effects of the rise in food prices and partly due to government measures to address rising prices. 2. **Come under upward pressure**, affected by the recent rise in crude oil prices. 3. **Rise gradually thereafter**, as the mechanism in which wages and prices rise moderately in interaction with each other is maintained. **Medium-term inflation dynamics:** - A sense of labor shortage is projected to grow as the economy continues to improve. - Medium- to long-term inflation expectations are expected to rise. - **Underlying CPI inflation is expected to increase gradually** and, in the second half of the projection period of the January 2026 Outlook for Economic Activity and Prices, **be at a level that is generally consistent with the price stability target** (2 percent). **Caveat:** Attention should be paid to the impact of the rise in crude oil prices on the outlook for underlying CPI inflation. --- ## Risk Assessment Risks to the outlook include: - The future course of the situation in the Middle East as well as developments in crude oil prices - Developments in overseas economic activity and prices under the impact of trade and other policies in each jurisdiction - Wage- and price-setting behavior of firms - Developments in financial and foreign exchange markets It is necessary to pay due attention to the impact of these risks on Japan's economic activity and prices. --- ## Monetary Policy Conduct Regarding the conduct of monetary policy: Given that **real interest rates are at significantly low levels**, if the outlook for economic activity and prices presented in the January Outlook Report will be realized, the Bank, **in accordance with improvement in economic activity and prices, will continue to raise the policy interest rate and adjust the degree of monetary accommodation**. With the price stability target of 2 percent, the Bank will conduct monetary policy as appropriate in response to developments in economic activity and prices as well as financial conditions, from the perspective of sustainable and stable achievement of the target. --- ## Dissenting Views ### TAKATA Hajime (Proposal for 1.0 percent rate) Takata argued that: - The price stability target had been more or less achieved - Risks to prices in Japan were skewed to the upside due to second-round effects of price rises stemming from overseas developments - The uncollateralized overnight call rate should be raised to around 1.0 percent **Outcome:** The proposal was defeated by a majority vote. ### TAKATA Hajime (Outlook for prices objection) Takata opposed the description regarding the outlook for prices, considering that the level of the rate of increase in the CPI, including underlying CPI inflation, already had generally reached the price stability target. ### TAMURA Naoki (Underlying CPI inflation objection) Tamura opposed the description regarding underlying CPI inflation, considering that underlying CPI inflation was likely to be at a level that was generally consistent with the price stability target from the beginning of fiscal 2026. --- ## Key Takeaways 1. **Rate on hold at 0.75%** — Second consecutive meeting with status quo, following December 2025 hike from 0.5%. 2. **Hawkish dissent growing** — TAKATA's proposal for a hike to 1.0% (defeated) signals internal pressure for tightening. 3. **Oil price vigilance** — Middle East tensions and crude oil price surges are central to the forward guidance, with explicit warnings about second-round inflation effects. 4. **Conditional path forward** — The Bank signals continued rate increases if the January 2026 Outlook materializes, conditioning on "improvement in economic activity and prices." 5. **Wage-price mechanism** — BoJ emphasizes that a virtuous wage-price spiral is developing, which will eventually warrant accommodation adjustment. 6. **Next meeting:** April 27-28, 2026