Bank of Japan
Updated
Summary
The Bank of Japan (BOJ) is Japan's central bank. Its nine-member Policy Board sets a guideline for the overnight call rate, which it raised to around 1.25% on 2026-09-18 by a 7-2 vote, effective 2026-09-24. Under Governor Ueda Kazuo it has been ending the long period of ultra-easy policy: it left negative rates in March 2024 and has since raised the rate in steps while shrinking its monthly purchases of Japanese government bonds (JGBs). It still owns about 41% of JGBs and T-bills (Flow of Funds, end-June 2026) and held ¥503.6 trillion of JGBs on 2026-10-10. It does not decide currency intervention: it executes FX intervention as agent of the Minister of Finance, using the government's Foreign Exchange Fund Special Account.
Key numbers
Uncollateralized overnight call rate guideline: around 1.25% (effective 2026-09-24; vote 7-2) (as of 2026-09-18). Source: boj.or.jp
Basic loan rate / complementary deposit rate: 1.5% / 1.25% (as of 2026-09-18). Source: boj.or.jp
BOJ JGB holdings (BOJ Accounts): ¥503.63 trillion (as of 2026-10-10). Source: boj.or.jp
BOJ total assets / current deposits: ¥624.63 trillion / ¥408.16 trillion (as of 2026-10-10). Source: boj.or.jp
BOJ share of T-bills and JGBs (Flow of Funds): 41.16% (¥470 trillion of ¥1,142 trillion); overseas 13.12% (as of 2026-06-30). Source: boj.or.jp
Planned monthly JGB purchases: about ¥2.3 trillion (Oct-Dec 2026), ¥2.1 trillion (Jan-Mar 2027), ¥2 trillion from April 2027 (as of 2026-06-16). Source: boj.or.jp
July 2026 Outlook medians, FY2026: real GDP / core CPI / CPI ex fresh food and energy: +0.6% / +2.5% / +2.5% (as of 2026-07-31). Source: boj.or.jp
ETF holdings (BOJ Accounts, book value): ¥36.95 trillion (as of 2026-10-10). Source: boj.or.jp
MOF FX intervention, 2026-07-30 to 08-26: ¥15,399.3 billion (direction not stated on the monthly page) (as of 2026-08-26). Source: mof.go.jp
MOF yen-buying intervention, 2026-04-30 to 05-06: ¥11,734.9 billion (three days, USD sold / JPY bought) (as of 2026-05-06). Source: mof.go.jp
MOF FX intervention, 2026-08-27 to 09-28: ¥0 (as of 2026-09-28). Source: mof.go.jp
Timeline
2026-10-14 — BOJ Accounts for 2026-10-10 published: JGBs ¥503.63 trillion, total assets ¥624.63 trillion. (Source: boj.or.jp)
2026-10-01 — Summary of Opinions (September meeting): neutral rate may be higher than thought; split on pace of further hikes. (Source: boj.or.jp)
2026-09-30 — MOF reports zero intervention for 2026-08-27 to 09-28. (Source: mof.go.jp)
2026-09-18 — Rate raised to around 1.25% by 7-2 (Asada and Sato dissent); yen depreciation cited as pushing up prices. (Source: boj.or.jp)
2026-09-17 — Flow of Funds 2Q 2026: BOJ holds 41.16% of T-bills and JGBs at end-June. (Source: boj.or.jp)
2026-08-28 — MOF reports ¥15,399.3 billion of intervention for 2026-07-30 to 08-26. (Source: mof.go.jp)
2026-07-31 — Rate held at around 1.0% by 8-1 (Takata for 1.25%); July Outlook cuts FY2026 core CPI median to 2.5%. (Source: boj.or.jp)
2026-06-16 — Rate raised from 0.75% to around 1.0% by 7-1; new JGB plan cuts monthly buying to about ¥2 trillion from April 2027. (Source: boj.or.jp)
2026-06-03 — Ueda: more than 90% of crude from the Middle East; upside price risks greater; rate hikes to continue. (Source: boj.or.jp)
2026-04-30 — First of three yen-buying interventions (to 2026-05-06), ¥11,734.9 billion in total, executed by the BOJ for MOF. (Source: mof.go.jp)
2026-04-28 — Rate held at around 0.75% by 6-3; three members wanted 1.0%; April Outlook raises FY2026 core CPI median to 2.8%. (Source: boj.or.jp)
2026-03-19 — Rate held at around 0.75% by 8-1; statement cites Middle East tension and a significant crude oil price rise. (Source: boj.or.jp)
2026-01-23 — Rate held at around 0.75% by 8-1 (Takata for 1.0%). (Source: boj.or.jp)
2025-12-19 — Rate raised to around 0.75%, unanimous, effective 2025-12-22. (Source: boj.or.jp)
2025-09-19 — Rate held at around 0.5% by 7-2; decision to sell ETFs (about ¥330 billion a year, book value) and J-REITs. (Source: boj.or.jp)
2025-01-24 — Rate raised to around 0.5% by 8-1, effective 2025-01-27. (Source: boj.or.jp)
Key actors and links
Japan (country:japan): The BOJ is Japan's central bank; its policy responds to an energy-import price shock, wages and slowing growth.
Japanese yen (asset:jpy): The BOJ issues the yen and its rate path sets yen funding costs; the September 2026 statement cites yen weakness pushing up prices.
JGBs (market:jgb): The BOJ holds about 41% of T-bills and JGBs and is cutting monthly purchases toward about ¥2 trillion from April 2027.
JGB yields (indicator:jgb-yields): Slower BOJ buying shifts JGB supply to private investors; the plan allows extra purchases if long-term rates rise rapidly.
BOJ normalization (policy:boj-normalization): Rate hikes from 0.5% (January 2025) to 1.25% (September 2026), JGB purchase cuts and ETF sales are the normalization path.
BOJ intervention (policy:boj-fx-intervention): The BOJ executes intervention as agent of the Minister of Finance; ¥11.73 trillion in April-May and ¥15.40 trillion in July-August 2026.
USD/JPY (market:usd-jpy): Intervention in 2024 and 2026 sold dollars for yen; BOJ hikes narrow the rate gap that drives USD/JPY.
Yen carry trade (theme:yen-carry-trade): Inference (AA): higher BOJ rates and intervention raise the cost and FX risk of borrowing yen to buy higher-yielding assets.
BOJ policy rate and expected path (indicator:boj-rate-expectations): Split votes (6-3 in April, 7-2 in September 2026) and the 2026-10-29/30 meeting drive market rate expectations.
Japan inflation and energy-import pressure (indicator:japan-inflation-energy-imports): Costly imported oil is the BOJ's main 2026 price driver; Ueda said Japan depends on the Middle East for over 90% of crude.
Crude oil (commodity:crude-oil): BOJ forecasts assume Dubai crude easing from about $105 to $70-80; a persistent rise is a stated risk.
Federal Reserve (actor:federal-reserve): The Fed's rate path sets the dollar side of the USD/JPY rate gap that the BOJ and MOF respond to.
July-August 2024 yen carry unwind (event:2024-07-yen-carry-unwind): The July 2024 episode came after MOF yen-buying of ¥5.53 trillion on 2024-07-11/12, executed by the BOJ; a prior case of policy and intervention meeting carry positions.
BIS (actor:bis): AA's 2026-10-20 article cites BIS Bulletin 124 (May 2026) on carry positions amplifying funding-currency moves; not re-read for this node.
Why it matters now
The BOJ is tightening into an imported energy shock. In March 2026 it cited rising Middle East tension and a large jump in crude oil prices; on 2026-06-03 Governor Ueda said Japan depends on the Middle East for more than 90% of its crude oil and that upside risks to prices 'appear to be greater overall'. The Board then raised the rate from 0.75% to 1.0% on 2026-06-16, held in July, and raised it to 1.25% on 2026-09-18, saying underlying inflation is approaching 2%, inflation expectations have kept rising and the yen's recent fall is pushing up durable-goods prices. Two members dissented in September, arguing the economy is not clearly strong, so the Board is split. The mechanism: costly oil and a weak yen raise prices and erode real incomes at the same time, which pushes the BOJ to hike for inflation control while growth slows (July Outlook median real GDP +0.6% for fiscal 2026).
The Ministry of Finance, using the BOJ as agent, also spent ¥11,734.9 billion buying yen from 2026-04-30 to 05-06 and ¥15,399.3 billion between 2026-07-30 and 08-26, then nothing from 08-27 to 09-28. Rate hikes and intervention both push toward a stronger yen; that raises the cost of yen funding and can pressure carry positions. The JGB channel works the other way: the BOJ cuts monthly bond buying by about ¥200 billion each quarter to about ¥2 trillion from April 2027, so private investors must absorb more JGBs. The next decision and Outlook Report are on 2026-10-29/30.
Risks and open questions
Bull case: The BOJ is doing what a credible central bank does in an imported-inflation shock: it raised the rate twice in 2026, to 1.25%, as underlying inflation approached 2% and inflation expectations rose, while saying it will keep raising rates. Its forecasts see core CPI easing toward 2% by fiscal 2028 and growth recovering as oil effects fade. The JGB taper is slow and predictable (about ¥200 billion less per quarter, flat at about ¥2 trillion a month from April 2027), and the plan keeps a backstop for rapid yield rises. With MOF intervention reserved for sharp yen falls, and none needed from late August to late September, the policy mix could stabilise the yen and inflation expectations without a disorderly move. Inference (AA): in that path, carry positions adjust gradually rather than unwinding suddenly.
Bear case: The BOJ is tightening into a supply shock it cannot fix. Higher rates do not add oil or LNG supply, but they raise debt-service costs while real incomes fall; the July Outlook already shows only +0.6% growth for fiscal 2026. The Board is divided: three members wanted faster hikes in April, two opposed the September hike, and one opinion says the neutral rate may be higher than assumed. MOF intervention totalled about ¥27 trillion in 2026 through August (the April-May part confirmed as yen-buying; July-August direction not yet published), which suggests heavy pressure on the yen despite hikes. Inference (AA): if the BOJ surprises hawkishly, BIS research suggests crowded yen-funded positions can amplify a sharp yen rise; if it falls behind, yen weakness feeds imported inflation. Shrinking BOJ JGB buying also leaves more supply for private investors as yields reprice.
Falsifiers: - Bull case fails if CPI less fresh food stays above 2.5% into 2027 while the BOJ holds at 1.25%, showing it is behind the curve. - Bull case fails if MOF reports renewed large intervention in the September-October 2026 or later monthly releases. - Bear case fails if the October 2026 Outlook raises fiscal 2026-2027 growth forecasts while core CPI forecasts fall toward 2%. - Bear case fails if the BOJ amends the JGB plan only to slow the taper, not to add emergency purchases, through mid-2027. - The AA carry-link inference fails if yen moves over the next two policy meetings show no relation to BOJ decision surprises or intervention days.
Value accrual gate: Not a crypto asset. The BOJ's policy transfers value between groups rather than accruing to a token: higher rates benefit yen savers and bank deposit margins and cost borrowers, the government's debt service and yen-funded carry traders. AA does not assume BOJ hikes raise or lower Japanese asset prices; the sign is UNKNOWN.
What to watch
Monetary Policy Meeting and October 2026 Outlook Report: rate decision, vote split and revised growth and CPI forecasts. (2026-10-29 to 2026-10-30 (Outlook released 2026-10-30)); Source: boj.or.jp
December Monetary Policy Meeting. (2026-12-17 to 2026-12-18); Source: boj.or.jp
JGB purchases step down to about ¥2.1 trillion a month in January-March 2027 under the June 2026 plan. (2027-01 to 2027-03); Source: boj.or.jp
MOF monthly intervention total for the period after 2026-09-28. (around end-October 2026 (no scheduled date verified)); speculative, no scheduled source
MOF Q3 2026 quarterly release with daily dates and direction of the July-August intervention. (early November 2026 (Q2 release came on 2026-08-07; date not verified)); speculative, no scheduled source
Start of BOJ ETF and J-REIT sales decided in September 2025. (no scheduled date); speculative, no scheduled source
AA inference
Inference (AA): The BOJ is the graph's control point for the cost of yen funding. Its 2026 pattern is hiking into a supply shock, with intervention by the Ministry of Finance at the currency edge, so yen-funded carry trades face both higher rates and two-way FX risk. AA reads the BOJ's reaction to energy-driven inflation as the link between Japan's import bill (oil, LNG, power prices) and global risk assets. AA watches three signals: the 2026-10-30 decision and Outlook forecasts, MOF monthly intervention totals, and the pace of JGB purchase cuts. The thesis weakens if the BOJ holds through December while core CPI falls back below 2%, or if the yen strengthens without rate hikes or intervention, which would show the carry channel is not driven by the BOJ.
Sources
On 2026-09-18 the Policy Board voted 7-2 to encourage the uncollateralized overnight call rate to remain at around 1.25%, effective 2026-09-24; the complementary deposit facility rate is 1.25% and the basic loan rate 1.5%. Asada Toichiro and Sato Ayano dissented and preferred no change. (Source: boj.or.jp, accessed 2026-10-21)
The 2026-09-18 statement says underlying CPI inflation is approaching 2%, medium- to long-term inflation expectations have kept rising, the recent yen depreciation is pushing up prices mainly of durable goods, and the Bank will keep raising the policy rate in response to economic, price and financial developments; risks include the Middle East situation, AI-related demand and FX developments. (Source: boj.or.jp, accessed 2026-10-21)
On 2026-06-16 the Board voted 7-1 to set the call rate at around 1.0%, effective 2026-06-17; Asada dissented, judging that downside risks to output and jobs from the Middle East situation outweighed upside price risks. (Source: boj.or.jp, accessed 2026-10-21)
The June 2026 JGB purchase plan: monthly purchases of about ¥2.5 trillion in July-September 2026, about ¥2.3 trillion in October-December 2026, about ¥2.1 trillion in January-March 2027, and about ¥2 trillion from April 2027, with no interim assessment; vote 7-1 (Tamura wanted the ¥200 billion quarterly cuts to continue to January-March 2028). (Source: boj.or.jp, accessed 2026-10-21)
The June 2026 plan projects BOJ JGB holdings (face value) of about ¥480 trillion at end-March 2027, about 17% below end-June 2024, and about ¥350-370 trillion at end-March 2030; it allows extra purchases or fixed-rate operations if long-term rates rise rapidly. (Source: boj.or.jp, accessed 2026-10-21)
On 2026-07-31 the Board kept the call rate at around 1.0% by 8-1; Takata Hajime proposed around 1.25%, saying the situation had shifted to 'a new phase'. (Source: boj.or.jp, accessed 2026-10-21)
July 2026 Outlook Report medians: real GDP +0.6% (FY2026), +0.8% (FY2027), +0.8% (FY2028); CPI less fresh food +2.5%, +2.4%, +2.0%; CPI less fresh food and energy +2.5%, +2.6%, +2.2%. April medians had been CPI less fresh food +2.8% for FY2026 and GDP +0.5%. (Source: boj.or.jp, accessed 2026-10-21)
The April 2026 Outlook baseline assumed Dubai crude falling from about $105 per barrel to roughly $70-80 toward the end of the projection period, assuming Middle East tensions ease and no large-scale supply disruption. (Source: boj.or.jp, accessed 2026-10-21)
On 2026-04-28 the Board kept the call rate at around 0.75% by 6-3; Nakagawa, Takata and Tamura proposed around 1.0%. (Source: boj.or.jp, accessed 2026-10-21)
On 2026-03-19 the Board kept the rate at around 0.75% by 8-1 and said increased tension in the Middle East had made markets volatile and pushed crude oil prices up significantly. (Source: boj.or.jp, accessed 2026-10-21)
On 2026-01-23 the Board kept the rate at around 0.75% by 8-1; Takata proposed around 1.0%, judging the price stability target more or less achieved. (Source: boj.or.jp, accessed 2026-10-21)
On 2025-12-19 the Board unanimously raised the call rate guideline to around 0.75%, effective 2025-12-22. (Source: boj.or.jp, accessed 2026-10-21)
On 2025-09-19 the Board kept the rate at around 0.5% by 7-2 and unanimously decided to sell its ETF holdings at about ¥330 billion a year (book value) and J-REITs at about ¥5 billion a year once operational preparations are complete. (Source: boj.or.jp, accessed 2026-10-21)
On 2025-01-24 the Board raised the call rate guideline to around 0.5% by 8-1, effective 2025-01-27. (Source: boj.or.jp, accessed 2026-10-21)
The BOJ's 2024 statements index lists 'Changes in the Monetary Policy Framework' on 2024-03-19, the meeting at which the Bank ended negative interest rates (detail carried from v1; decision text not re-read in this pass). (Source: boj.or.jp, accessed 2026-10-21)
Governor Ueda, 2026-06-03: Japan depends on the Middle East for more than 90% of its crude oil; growth is likely to decelerate temporarily in fiscal 2026; 'the upside risks to prices appear to be greater overall'; the Bank will continue to raise the policy rate; real interest rates remain negative. (Source: boj.or.jp, accessed 2026-10-21)
Summary of Opinions for the 2026-09-17/18 meeting (released 8:50 a.m. Japan Standard Time on 2026-10-01): one opinion says the neutral rate may be above prior estimates; some members favour moving closer to the goal relatively soon, others see no need for hasty action. (Source: boj.or.jp, accessed 2026-10-21)
BOJ Accounts as of 2026-10-10: total assets ¥624.63 trillion; JGBs ¥503.63 trillion; ETFs ¥36.95 trillion; current deposits ¥408.16 trillion; banknotes ¥114.03 trillion; loans ¥68.42 trillion. (Source: boj.or.jp, accessed 2026-10-21)
Flow of Funds, 2Q 2026 preliminary (released 2026-09-17): of ¥1,142 trillion of T-bills and JGBs, the BOJ held ¥470 trillion (41.16%) and overseas investors ¥150 trillion (13.12%) at end-June 2026. (Source: boj.or.jp, accessed 2026-10-21)
The Minister of Finance is legally authorized to intervene; the BOJ executes interventions as the Minister's agent, funded through the Foreign Exchange Fund Special Account (yen-buying uses dollars held in the account). (Source: boj.or.jp, accessed 2026-10-21)
MOF: FX intervention totalled ¥15,399.3 billion in the period 2026-07-30 to 2026-08-26; the monthly page does not state direction or daily dates. (Source: mof.go.jp, accessed 2026-10-21)
MOF quarterly data: the BOJ, for MOF, sold dollars and bought yen on 2026-04-30 (¥6,278.7 billion), 2026-05-04 (¥780.2 billion) and 2026-05-06 (¥4,675.9 billion). (Source: mof.go.jp, accessed 2026-10-21)
MOF: intervention was zero in 2026-05-28 to 06-26 and in 2026-08-27 to 09-28. (Source: mof.go.jp, accessed 2026-10-21)
MOF historical intervention data show yen-buying in April-May 2024 (¥9.79 trillion) and July 2024 (¥5.53 trillion) and no intervention in 2025. (Source: mof.go.jp, accessed 2026-10-21)
BOJ 2026 schedule: the next Monetary Policy Meeting is 2026-10-29/30 with an Outlook Report on 2026-10-30, followed by 2026-12-17/18; the 2027 schedule starts 2027-01-21/22. (Source: boj.or.jp, accessed 2026-10-21)