ECB Review: The New Neutral

At the Monetary Policy Meeting held today, the Policy Board of the Bank of Japan decided, by a unanimous vote, to set the following guideline for money market operations for the intermeeting period: The Bank will encourage the uncollateralized overnight call rate to remain at around 0.75 percent. In accordance with the change in the guideline for money market operations, the Bank decided, by a unanimous vote, to change the interest rates applied to its measures. Interest rate applied to the complementary deposit facility The interest rate applied to the complementary deposit facility (the interest rate applied to current account balances held by financial institutions at the Bank, excluding required reserve balances) will be 0.75 percent. Decision at the December 2025 MPM It is highly likely that the mechanism in which both wages and prices rise moderately will be maintained. • The likelihood of realizing the baseline scenario that underlying CPI inflation will be at a level that is generally consistent with the price stability target of 2 percent in the second half of the projection period of the October 2025 Outlook Report has been rising. • While uncertainties remain, they have declined. • It is highly likely that firms will continue to raise wages steadily next year, following the solid wage increases this year. • The risk of firms' active wage-setting behavior being interrupted is low. BOJ: JAPAN'S REAL RATE IS AT SIGNIFICANTLY LOW LEVEL BOJ: TO RAISE RATES IN LINE WITH ECONOMIC, PRICE IMPROVEMENT BOJ: ACCOMMODATIVE CONDITIONS TO KEEP SUPPORTING ECONOMY