Bank of Japan keeps the overnight call rate around 1.25%

The Bank of Japan decided on Oct. 30 to keep encouraging the uncollateralized overnight call rate to remain around 1.25%. The statement says the guideline passed by an 8-1 vote. Takata Hajime voted against it. He proposed a guideline of around 1.5%, arguing that underlying consumer-price inflation had reached the price-stability target and that the Bank should move the policy rate toward the neutral rate more quickly so it could respond nimbly. That proposal was defeated. The statement says the decision was released at 12:02 on Friday. A hold at 1.25% is the Board’s vote. It is not a view on the yen or on Japanese assets.

At the same meeting the Board voted unanimously to sell its exchange-traded fund holdings at about 0.1% of stock-market trading value, and to set the pace at about 860 billion yen a year on a book-value basis. The Bank said that pace, converted at the market-to-book ratio of the ETFs it sold from January to September 2026, would be about 2,460 billion yen a year at market value. The change starts in January 2027. Until then, the pace set in September 2025 remains about 330 billion yen a year on a book-value basis, a scale the Bank put at about 0.05% of trading value when it chose it. Sales began in January 2026. The Bank said those sales have gone smoothly and that market trading value has been expanding. A temporary adjustment or a suspension can still be made inside the annual pace if market conditions change. Sales of Japan real estate investment trusts stay at about 5 billion yen a year on a book-value basis.

A companion note puts the time to complete the ETF sales at about 43 years at the new book-value pace, compared with about 112 years at the previous pace. Those years use holdings at the end of September 2026 divided by the annual book-value amount. They are the Bank’s arithmetic, not a schedule this article is predicting.

The same morning the Bank published the Board’s October outlook medians. Real GDP growth is 0.7% for fiscal 2026, 0.7% for fiscal 2027, and 0.8% for fiscal 2028. Compared with the July outlook, those medians are 0.1 point higher, 0.1 point lower, and unchanged. The median for consumer prices excluding fresh food is 2.5%, 2.6%, and 2.0% across those three fiscal years. Excluding fresh food and energy, the medians are 2.4%, 2.7%, and 2.3%. The note says the figures do not include a proposed cut in the consumption tax on food and beverages. The Bank describes underlying inflation as generally consistent with its 2% target and expected to stay around that level. It says risks to economic activity are generally balanced and risks to prices are skewed to the upside. Those paths and risk labels are the Board’s outlook, not a forecast from this article.