Bank of Japan holds its call rate at around 1.25 per cent and almost triples its ETF sale pace

International Central bank Economy & Banking

Bank of Japan holds its call rate at around 1.25 per cent and almost triples its ETF sale pace

30 October 2026

At its monetary policy meeting on 30 October 2026 the Bank of Japan decided to keep encouraging the uncollateralized overnight call rate to remain at around 1.25 per cent. The decision was taken by 8 votes to 1. Takata Hajime dissented and proposed a rate of around 1.5 per cent. The Board also decided, unanimously, to raise the pace at which it sells its exchange-traded fund holdings from about 330 billion yen a year to about 860 billion yen a year at book value, which is about 0.1 per cent of market trading value. The faster sales take effect from January 2027, and the Bank may temporarily adjust or suspend sales within that annual pace depending on market conditions. The pace of sales of Japan real estate investment trusts, J-REITs, stays at about 5 billion yen a year at book value. The uncollateralized overnight call rate is the Bank of Japan's main policy rate.

Policy rate: Around 1.25 per cent Vote: 8-1 New ETF sale pace: About 860 billion yen a year, from January 2027 J-REIT sale pace: About 5 billion yen a year

Why it matters for exams: Fixes the Bank of Japan's policy instrument - the uncollateralized overnight call rate - its level, and the new annual pace of its ETF unwinding.

Kerala PSCUPSC

30 October 2026 Source: Trading Economics (Japan interest rate)

In plain words

ETF Exchange-traded fund — A fund whose units trade on a stock exchange; the Bank of Japan bought ETFs for years and is now selling them down.

J-REIT Japan real estate investment trust — A listed trust that holds Japanese real estate; the Bank of Japan also holds and sells these.