Bank of Japan holds its policy rate at 1.25% and speeds up its ETF sales

The Bank of Japan’s Policy Board decided on October 30, 2026 to keep encouraging the uncollateralized overnight call rate to remain at around 1.25%. The vote was 8-1. At the same meeting it decided unanimously to speed up the sale of its exchange-traded fund holdings.

The rate vote

Board member Takata Hajime voted against and proposed raising the target to around 1.5%. According to the statement, he considered that with underlying CPI inflation having reached the price stability target, the Bank needs to step up the pace of bringing its policy rate closer to the neutral rate. His proposal was defeated by a majority vote.

Faster ETF sales

The BoJ decided in September 2025 to sell its ETF holdings at a scale of about 0.05 percent of stock market trading value, a pace of about 330 billion yen a year on a book value basis. It began selling in January 2026. The Bank said the sales have gone smoothly without a major impact on the market, while trading value in the stock market has been expanding.

From January 2027, it will sell at a scale of about 0.1 percent of market trading value, a pace of about 860 billion yen a year at book value. Converted to market value, the BoJ puts that at about 2,460 billion yen a year, based on Tokyo Stock Exchange Prime Market trading value and the market-to-book ratio of the ETFs it sold from January to September 2026.

The Bank may still adjust or suspend sales temporarily, within the annual pace, if market conditions change. Sales of Japan real estate investment trusts stay at about 5 billion yen a year.

What comes next

The full Outlook for Economic Activity and Prices is due on November 2, the Summary of Opinions from this meeting on November 10, and the minutes on December 23. The decision follows rate holds by the US Federal Reserve (read our brief) and the ECB (read our brief) earlier in the week.