Bank of Japan holds rate at 1.25% and more than doubles its ETF sales pace

An 8-1 vote to stand pat

The Bank of Japan left its short-term guideline unchanged on October 30, encouraging the uncollateralized overnight call rate to stay at around 1.25%.

The Policy Board split 8-1. Takata Hajime voted against and proposed a rate of around 1.5%. He argued that underlying CPI inflation has reached the price stability target, and that the Bank now needs to move faster toward the neutral rate so it can respond nimbly. His proposal was defeated.

ETF sales speed up

The larger change came in the Bank's equity holdings. In a unanimous decision, the board raised the pace of ETF sales to about 860 billion yen a year on a book value basis, from about 330 billion yen. Sales will run at about 0.1 percent of market trading value, up from about 0.05 percent. The new pace starts in January 2027.

Converted to market value, the annual amount comes to about 2,460 billion yen. The Bank began selling in January 2026 and said the programme has gone smoothly, without a major market impact. It cited expanding trading value in the stock market as the reason for the step-up, and it kept the option to adjust or suspend sales if conditions call for it. J-REIT sales stay at about 5 billion yen a year.

What yen and Nikkei futures traders watch

For traders of yen and Japanese government bond futures, the dissent is the main item, because it puts a concrete alternative rate on the table and shows how the debate inside the board is moving.

Equity index futures traders usually focus on the supply side. The Bank sizes its sales against trading value so they stay small relative to daily volume, and the January 2027 start date gives the market time to prepare.