Bank of Japan Signals End of Decade-Long Monetary Stimulus

The Bank of Japan raised interest rates and projected steady inflation around 2%, marking a significant move to unwind a decade of monetary stimulus. The central bank also detailed a quantitative tightening plan, aiming to cut bond buying to 3 trillion yen by early 2026.

The Bank of Japan raised interest rates on Wednesday and projected inflation to stay around its 2% target in the coming years, signaling its resolve to steadily unwind a decade of massive monetary stimulus.

At the two-day policy meeting that ended on Wednesday, the central bank also laid out a detailed quantitative tightening plan that will reduce monthly bond buying in several stages to around 3 trillion yen ($19.6 billion) as of January-March 2026.

The nine-member board decided to hike the overnight call rate target to 0.25% from the previous 0-0.1% range by a 7-2 vote. BOJ Governor Kazuo Ueda is set to hold a news conference at 0630 GMT to explain the decision.