The Bank of Japan guides the call rate to around 1.25 percent, 7–2

Serguey Asael Shinder22 September 2026, 01:102 min read

At the Monetary Policy Meeting of 18 September 2026 the Policy Board of the Bank of Japan decided, by a 7–2 majority, to set the guideline for money market operations so that the Bank "will encourage the uncollateralized overnight call rate to remain at around 1.25 percent".

By the same 7–2 majority it changed the rates applied to its own facilities:

• the complementary deposit facility — the rate on current account balances held at the Bank, excluding required reserves — goes to 1.25 percent;
• the basic loan rate under the complementary lending facility goes to 1.5 percent, and the basic discount rate is set to the same figure.

Both take effect on 24 September 2026, as does the new guideline.

A third decision, taken unanimously, changes the Funds-Supplying Operations to Support Financing for Climate Change Responses: the loan rate becomes a floating rate and the Bank sets upper limits on the amount of loans, stated to be for providing stable support to private climate efforts while keeping market operations smooth. In the same footnote the Bank changes loan rates for its disaster-area and pooled-collateral operations, and removes the Great East Japan Earthquake from the designated disasters under the disaster-area facility.

What it means

The corridor moved as a block. Deposit facility at 1.25, lending facility at 1.5: the call rate is being guided to the floor of a corridor whose ceiling is 25 basis points above. The structure, not just the level, is what money market desks price.

7–2 is a real minority. Two dissents on both the guideline and the facility rates is not a rounding error on a board of nine, and the names and reasons appear in the minutes rather than in the statement.

The climate facility change is the quiet one. Moving that lending from a fixed to a floating rate and capping volumes converts a standing subsidy into something that tracks policy. Removing the 2011 earthquake from the designated disasters closes a fifteen-year programme, which is a sentence in a footnote and a real change for the institutions using it.

⚠ Read from the Bank's own release. We publish no forecasts of the policy rate or the yen.