Bank of Japan keeps key interest rate unchanged at 0.75%

Jan 23, 2026

Synopsis
The Bank of Japan has kept its key interest rate steady at 0.75 percent. This decision was widely expected by analysts. The central bank anticipates inflation will fall below two percent in early 2026. Japan's economy is projected to grow moderately. Prime Minister Sanae Takaichi is preparing for a snap election on February 8.

Japan's central bank left its key interest rate unchanged at 0.75 percent in a policy decision, it said in a statement Friday.

The Bank of Japan (BOJ) began hiking rates from below zero in 2024, as figures signalled an end to the country's "lost decades" of stagnation.

The monetary status quo was widely anticipated by analysts after a rate hike in mid-December.

The BOJ predicts that consumer price inflation, excluding fresh food, will fall below two percent year-on-year during the first half of 2026, noting the government's measures against inflation.

The bank's decision comes as Japanese Prime Minister Sanae Takaichi prepares to dissolve parliament ahead of a snap election on February 8.

Public discontent over rising prices largely contributed to the downfall of prime minister Shigeru Ishiba, whom Takaichi succeeded in October, vowing to address the issue and shore up the world's fourth-largest economy.

"Japan's economy is likely to continue growing moderately, with overseas economies returning to a growth path and as a virtuous cycle from income to spending gradually intensifies," the BOJ said.

[The Economic Times]