July 31, 2024
Bank of Japan
Change in the Guideline for Money Market Operations and Decision on the Planfor the Reduction of the Purchase Amount of Japanese Government Bonds

1.

At the Monetary Policy Meeting (MPM) held today, the Policy Board of the Bank of Japandecided, by a 7-2 majority vote, to set the following guideline for money market operations forthe intermeeting period: [Note]
The Bank will encourage the uncollateralized overnight call rate to remain at around 0.25
percent.1

2.

Regarding the reduction of its purchase amount of Japanese government bonds (JGBs), theBank decided, by a unanimous vote, on a plan to reduce the amount of its monthly outrightpurchases of JGBs so that it will be about 3 trillion yen in January-March 2026. The amountwill be cut down by about 400 billion yen each calendar quarter in principle (see Attachment).2

3.

In accordance with the change in the guideline for money market operations, the Bank madethe following decisions, including changes to the interest rates applied to its measures, by a 72 majority vote.3 [Note](1) Interest rate applied to the complementary deposit facility
The interest rate applied to the complementary deposit facility (the interest rate applied tocurrent account balances held by financial institutions at the Bank, excluding requiredreserve balances) will be 0.25 percent.
(2) Basic loan rate4
The basic loan rate applicable under the complementary lending facility will be 0.5 percent.

The new guideline for money market operations will be effective from August 1, 2024.
Regarding purchases of CP and corporate bonds, the Bank will conduct the purchases in accordance withthe decisions made at the March 2024 MPM.
3 The new interest rate applied to the complementary deposit facility and the new basic loan rate will beeffective from August 1, 2024. With a view to further facilitating money market operations, the Bank alsodecided to introduce a fixed-rate method for sales of Japanese government securities (JGSs) with repurchaseagreements.
4 The basic loan rate is stipulated in Article 15, paragraph 1, item (ii) of the Bank of Japan Act. The basic
discount rate in item (i) in the same paragraph also will be 0.5 percent (discounting of bills is currently
suspended).
121

(3) Interest rates applied to new loan disbursements under the Fund-Provisioning Measure toStimulate Bank Lending etc.
The interest rates applied to the Funds-Supplying Operation to Support FinancialInstitutions in Disaster Areas and the Funds-Supplying Operations to Support Financing
for Climate Change Responses will be 0.25 percent. Regarding the Fund-Provisioning
Measure to Stimulate Bank Lending, the Bank will provide the loans on a floating ratebasis.5
4.

Japan's economic activity and prices have been developing generally in line with the outlookpresented in the previous Outlook for Economic Activity and Prices (Outlook Report). In thecorporate sector, business fixed investment has been on a moderate increasing trend, withcorporate profits improving. In the household sector, private consumption has been resilient
despite the impact of price rises and other factors. On the wage side, moves to raise wages not
only have been seen for large firms, which achieved wage increases that were significantly
higher than those seen in the previous year in this year's annual spring labor-management wage
negotiations, but also have been spreading across regions, industries, and firm sizes. On theprice front, although the effects of a pass-through to consumer prices of cost increases led by
the past rise in import prices have waned, services prices have continued to rise moderately,with a strengthening of moves to reflect wage increases in selling prices. Inflation expectationsof firms and households have risen moderately. The year-on-year rate of change in importprices has turned positive again, and upside risks to prices require attention.
In view of these circumstances, the Bank judged it appropriate to adjust the degree of monetaryaccommodation from the perspective of sustainable and stable achievement of the pricestability target of 2 percent. Real interest rates are expected to remain significantly negative
after the change in the policy interest rate, and accommodative financial conditions willcontinue to firmly support economic activity.

5.

As for the future conduct of monetary policy, while it will depend on developments in economicactivity and prices as well as financial conditions going forward, given that real interest rates
are at significantly low levels, if the outlook for economic activity and prices presented in theJuly Outlook Report will be realized, the Bank will accordingly continue to raise the policy
interest rate and adjust the degree of monetary accommodation. With the price stability targetof 2 percent, it will conduct monetary policy as appropriate, in response to developments in

The interest rate on the loans shall be the average of the interest rates applied to the complementary deposit
facility during the period in which the loans are extended.
52economic activity and prices as well as financial conditions, from the perspective of sustainable
and stable achievement of the target.

[Note]

Voting for the action: UEDA Kazuo, HIMINO Ryozo, UCHIDA Shinichi, ADACHI Seiji, NAKAGAWA
Junko, TAKATA Hajime, and TAMURA Naoki. Voting against the action: NAKAMURA Toyoaki andNOGUCHI Asahi. Nakamura Toyoaki dissented, considering that the Bank should decide on changing
the guideline for money market operations after assessing sources such as the Financial Statements
Statistics of Corporations by Industry at the next MPM, and that therefore it was desirable to only
indicate this approach at this MPM. Noguchi Asahi dissented, considering that it was necessary to more
carefully assess how the economic situation had improved with wage hikes becoming widespread, basedon relevant data.

3Attachment
Plan for the Reduction of the Purchase Amount of Japanese Government Bonds

In principle, long-term interest rates are to be formed in financial markets, and it is appropriate for
the Bank to reduce its purchase amount of Japanese government bonds (JGBs) in a predictablemanner, while allowing enough flexibility to support stability in the JGB markets. Taking this intoaccount, the Bank will conduct the outright purchases of JGBs until March 2026 as follows.
1.

The Bank will reduce the planned amount of its monthly purchases of JGBs so that it will be
about 3 trillion yen in January-March 2026. The amount will be cut down by about 400 billion
yen each calendar quarter in principle (see Annex).

2.

At the June 2025 Monetary Policy Meeting (MPM), the Bank will conduct an interim
assessment of the plan for the reduction of its purchase amount of JGBs. In principle, the Bank
intends to maintain the plan for the reduction after the assessment, while it may modify theplan as appropriate, if deemed necessary after reviewing the developments in and functioningof the JGB markets. At the meeting, it will also discuss a guideline for its JGB purchases fromApril 2026 and announce the results.

3.

In the case of a rapid rise in long-term interest rates, it will make nimble responses by, forexample, increasing the amount of JGB purchases and conducting fixed-rate purchase
operations of JGBs -- both of which can be done regardless of the monthly schedule of JGB
purchases -- and the Funds-Supplying Operations against Pooled Collateral.

4.

The Bank is prepared to amend the plan for the reduction of its purchase amount of JGBs atthe MPMs, if deemed necessary.

4AnnexAmount of Monthly Outright Purchases of Japanese Government Bonds

Amount of outright purchases of Japanese
government bonds (JGBs)
July 2024 (amount purchased)

About 5.7 trillion yen

August-September 2024

About 5.3 trillion yen

October-December 2024

About 4.9 trillion yen

January-March 2025

About 4.5 trillion yen

April-June 2025

About 4.1 trillion yen

July-September 2025

About 3.7 trillion yen

October-December 2025

About 3.3 trillion yen

January-March 2026

About 2.9 trillion yen

Note: The schedule of the outright purchases of JGBs, including the purchase size per auction
by residual maturity and dates, will be continued to be announced in "Quarterly Scheduleof Outright Purchases of Japanese Government Bonds (Competitive Auction Method)."5Reference
Meeting hours:
Tuesday, July 30: 14:00-15:51
Wednesday, July 31: 9:00-12:49
Policy Board members present:
UEDA Kazuo, Chairman (Governor)
HIMINO Ryozo (Deputy Governor)
UCHIDA Shinichi (Deputy Governor)
ADACHI Seiji
NAKAMURA Toyoaki
NOGUCHI Asahi
NAKAGAWA Junko
TAKATA Hajime
TAMURA Naoki[Others present]
July 30
From the Ministry of Finance:
TERAOKA Mitsuhiro, Deputy Vice-Minister for Policy Planning and Coordination(14:00-15:51)
From the Cabinet Office:
HAYASHI Sachihiro, Vice-Minister for Policy Coordination (14:00-15:51)
July 31
From the Ministry of Finance:
AKAZAWA Ryosei, State Minister of Finance (9:00-12:26, 12:35-12:49)
From the Cabinet Office:
IBAYASHI Tatsunori, State Minister of Cabinet Office (9:00-12:26, 12:35-12:49)
Release dates and times:
Change in the Guideline for Money Market Operations and Decision on the Plan for the Reductionof the Purchase Amount of Japanese Government Bonds -- Wednesday, July 31at 12:56
Outlook for Economic Activity and Prices (Outlook Report)
The Bank's View -- Wednesday, July 31at 12:56
Full text -- Thursday, August 1 at 14:00
Summary of Opinions -- Thursday, August 8 at 8:50
Minutes of the Monetary Policy Meeting -- Thursday, September 26 at 8:50