Minutes of the July 30–31 Monetary Policy Meeting
Overview
At its July 30–31, 2026 meeting, the Policy Board of the Bank of Japan reviewed economic and financial conditions and the outlook. By majority vote, it decided on a guideline for market operations to encourage the uncollateralized overnight call rate to remain at around 1.0% until the next meeting. Board Member Takada's proposal to set the rate at around 1.25% was rejected by a majority. Members assessed that risks to the economic outlook were broadly balanced, while risks to the price outlook were tilted to the upside. These minutes were approved at the September 17–18 meeting. Separately, the minutes of the June 15–16 meeting were scheduled for publication on August 5.
Key points
- The Chair's proposal for the guideline for market operations was decided by majority vote.
- Members assessed that risks to the economic outlook were broadly balanced, while risks to the price outlook were tilted to the upside.
- Board Member Takada's proposal to raise the rate to around 1.25% was rejected by a majority.
Overview
The Policy Board of the Bank of Japan held a monetary policy meeting on July 30 and 31, 2026. These minutes were approved at the meeting held on September 17 and 18, 2026, as the "document describing an outline of the proceedings" stipulated in Article 20, Paragraph 1 of the Bank of Japan Act.
Members shared the view that overseas economies were growing moderately despite some weakness, partly due to the situation in the Middle East, and that Japan's economy was also recovering moderately despite some signs of weakness. They assessed that domestic financial conditions were accommodative.
Under the baseline economic outlook, higher crude oil prices would be a downward pressure in fiscal 2026, while global AI-related demand, government measures, and accommodative financial conditions would provide support, allowing moderate growth to continue at a slower pace. From fiscal 2027 onward, the effects of high oil prices would wane, and growth would gradually accelerate as the virtuous cycle from income to spending strengthened.
Details
The Chair's proposal called for a guideline to encourage the uncollateralized overnight call rate to remain at around 1.0% through the next meeting, and was decided by majority vote. Board Member Takada submitted a proposal to set the rate at around 1.25%, but it was rejected, with only Takada in favor. The statement for release, "On the Conduct of Monetary Policy for the Time Being," was decided unanimously.
Members shared the baseline outlook that the year-on-year rate of increase in the consumer price index (all items less fresh food) would rise to a level clearly above 2% from the second half of fiscal 2026 onward, reflecting the pass-through of wage increases to prices, higher crude oil prices, AI-related demand, and the depreciation of the yen. Thereafter, the rate of increase was expected to decline toward around 2% in the latter half of the projection period. Most members expected the underlying rate of increase to be at a level broadly consistent with the price stability target from the second half of fiscal 2026 through fiscal 2027, and to remain at about that level thereafter.
Members shared the view that the Bank would raise its policy interest rate and adjust the degree of monetary accommodation in response to developments in economic activity, prices, and financial conditions. The timing and pace would be considered while assessing the likelihood of the outlook being realized and its risks, including the situation in the Middle East, AI-related demand, and foreign exchange rate movements. They said it was important to stabilize the underlying rate of increase in prices at around 2%, so that risks of it materializing on the upside beyond the 2% target would not adversely affect the economy thereafter.
In line with the guideline decided at the previous meeting, the Bank conducted market operations, and the uncollateralized overnight call rate was in the range of 0.976–0.981%. Outright purchases of long-term Japanese government bonds amounted to around 2.7 trillion yen per month in June 2026 and around 2.5 trillion yen per month in July. In line with the plan, the amount purchased in July was reduced by around 200 billion yen per month from June.