BOJ changes policy interest rate to around 1.25%, applicable from September 24The Bank of Japan set its key interest rate at around 1.25%
At its Monetary Policy Meeting on September 18, 2026, the Bank of Japan decided to encourage the uncollateralized overnight call rate to remain at around 1.25%. The vote was 7 in favor and 2 against. The interest rate applied under the Complementary Deposit Facility is 1.25% and the Basic Loan Rate is 1.5%; both apply from the next business day, September 24.
Key points
- Guideline for the uncollateralized overnight call rate: around 1.25% (7 in favor, 2 against)
- Interest rate applied under the Complementary Deposit Facility changed to 1.25%; Basic Loan Rate under the Complementary Lending Facility changed to 1.5%
- The new guideline and rates apply from the next business day, September 24
- The statement indicated that the Bank will continue to raise the policy interest rate and adjust the degree of monetary easing in line with economic, price and financial conditions
- The 2 dissenting members argued for keeping rates unchanged, citing reasons such as that a rate hike at this point is not appropriate
What to do in practice
- For each loan agreement, check in the contract whether the rate is floating or fixed and what benchmark it is reviewed against
- Review the interest rate assumptions in repayment schedules and cash flow tables to match current contract terms
The Bank of Japan decided to guide the short-term interest rate that banks charge each other for lending money to around 1.25%. This will be used from September 24. It can also affect, in various ways, the interest rates on loans that companies and families take from banks.
- 1. BOJ decidesSets the target for the short-term rate between banks
- 2. Banks' termsBanks may review their lending terms
- 3. Check your contractThe effect on your loan depends on whether it is floating or fixed
- 4. Repayment planCheck how much interest you can expect
Points
- The plan is to keep the short-term rate for lending between banks at about 1.25%
- The standard rate when the Bank of Japan lends to banks is 1.5%
- The new policy starts on September 24
What the words mean
- Policy interest rate
- The interest rate that the Bank of Japan sets as a guide to adjust the flow of money in society
- Floating rate
- An interest rate that is reviewed from time to time and can go up or down
- Bank of Japan: Bank of Japan: Monetary Policy Decisions, 2026
- Bank of Japan: Bank of Japan: Change in the Guideline for Market Operations (September 18, 2026)
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