Near-Term Monetary Policy Operations
Overview
At its October 30, 2026 Monetary Policy Meeting, the Bank of Japan decided to guide the uncollateralized overnight call rate to around 1.25% until the next meeting. It will revise ETF sales to a scale equivalent to around 0.1% of total market trading value, with an annual pace of around 860 billion yen on a book-value basis. Sales will begin in January 2027, with temporary adjustments or suspensions permitted depending on market and other conditions. The annual pace of J-REIT sales will remain around 5 billion yen.
Key points
- As its market operations guideline, the Bank of Japan will guide the uncollateralized call rate to around 1.25%.
- Raise the annual pace of ETF sales to around 860 billion yen on a book-value basis.
- The revised ETF sales will begin in January 2027.
Overview
At the October 30, 2026 Policy Board Monetary Policy Meeting, the Bank of Japan decided on its market operations guideline through the next Monetary Policy Meeting. The decision was adopted by 8 votes to 1.
At its September 2025 meeting, the Bank of Japan had decided that, for the time being, ETF sales would be conducted at a scale similar to the sale of shares purchased from financial institutions. This time, it reviewed the scale of sales in light of progress since ETF sales began and conditions in the stock market.
Impact
The Bank of Japan explained that since beginning ETF sales in January this year, it has proceeded smoothly without having a significant impact on the market. It also stated that total trading value in the stock market has expanded.
Details
As its market operations guideline, the Bank of Japan will encourage the uncollateralized overnight call rate to remain at around 1.25%. The vote was 8 in favor and 1 opposed. Takata Board Member, who opposed the decision, submitted a proposal to guide the uncollateralized call rate to around 1.5%, but it was rejected by a majority vote.
The new scale of ETF sales will be set at a level equivalent to around 0.1% of total market trading value, with an annual sales pace of around 860 billion yen on a book-value basis. The previous pace decided in September 2025 was around 330 billion yen annually on a book-value basis, and the sales share at the time was around 0.05%. The current market-value equivalent was calculated using total trading value for the Tokyo Stock Exchange Prime Market from January through September 2026 and the market-to-book ratio of ETFs sold by the Bank of Japan over the same period.
Depending on market and other conditions, the sale amount may be temporarily adjusted or sales may be suspended within the annual sales pace. This operating approach will remain unchanged. For J-REITs, the sales pace will also remain around 5 billion yen annually on a book-value basis. The revised ETF sales will begin in January 2027.