Terms explained: the basic loan rate is now 1.50 percent, separate from the policy rateThe interest the Bank of Japan charges banks is 1.50 percent
The Bank of Japan publishes a figure called the basic discount rate and basic loan rate, and since September 24, 2026 (Reiwa 8) it has been 1.50 percent. This is the rate applied in principle under the Complementary Lending Facility, through which the Bank lends funds passively on application by financial institutions. It is published separately from the policy rate referred to in the news. Here we check the mechanics and the recent moves against the published material.
- August 1, 20240.50 percent
- January 27, 20250.75 percent
- December 22, 20251.00 percent
- June 17, 20261.25 percent
- September 24, 20261.50 percent
Key points
- According to the Bank of Japan, the basic discount rate and basic loan rate has been 1.50 percent since September 24, 2026
- Before that it was 1.25 percent from June 17, 2026, 1.00 percent from December 22, 2025, 0.75 percent from January 27, 2025, and 0.50 percent from August 1, 2024, having been raised in steps
- The Complementary Lending Facility is lending that the Bank of Japan executes passively on receipt of an application from a financial institution, within the value of the collateral submitted, repayable on the next business day
- The rate applied is in principle the basic loan rate. Originally, use beyond five business days per reserve maintenance period was in principle subject to the basic loan rate plus 2.0 percent, but the Bank explains that since March 2003 a measure allowing borrowing at the basic loan rate on all business days has continued
- The rate is published as time series data together with the date each level took effect, so past levels can be traced back
What to do in practice
- When reading articles about interest rates, keep in mind that the policy rate and the basic loan rate are published as separate figures
- Your own borrowing rate follows the benchmark set in the loan agreement, so check the clause that describes how the rate is determined
When a bank wants to borrow money, it can borrow from the Bank of Japan. The interest on that is called the basic loan rate, and since September 24, 2026 it has been 1.50 percent. It is a short loan, repaid on the next business day, and a bank can borrow up to the value of the collateral it has lodged in advance. About two years ago the rate was 0.50 percent, so you can see it has been climbing step by step.
Points
- The interest the Bank of Japan charges banks has been 1.50 percent since September 24, 2026
- The money borrowed is repaid on the next business day, up to the value of the collateral lodged
- In August 2024 it was 0.50 percent, and after four increases it is now 1.50 percent
What the words mean
- basic loan rate
- The rate of interest the Bank of Japan charges when it lends money to banks
- collateral
- Something lodged in advance to stand in place of the money if it cannot be repaid
- Bank of Japan: Bank of Japan, Basic Discount Rate and Basic Loan Rate
- Bank of Japan: Bank of Japan, Complementary Lending Facility
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