Japan’s monetary base stood at ¥532.8 trillion in September 2026, according to data released today. It was down 15.2% year on year. The pace of contraction eased slightly from 15.7% in August, but the decline remains substantial. Compared with the previous month’s ¥543.0 trillion, the total fell by ¥10.2 trillion, one of the largest monthly declines of the past 12 months. The overnight call rate settled at 1.043%, up from 0.977% in August. BOJ statistics show that quantitative contraction and rising short-term interest rates continue to unfold in parallel.
[Flash] Monetary Base: Down 15.2% Year on Year to ¥532.8 Trillion
The September monetary base of ¥532.8 trillion represents a decline of about 1.9% from the previous month. The year-on-year decline of 15.2% was slightly smaller than August’s 15.7%, but remains a steep contraction rate in the high teens. Over the past 12 months, the rate of decline widened consistently from 9.5% in January 2026, and September extends that trend.
The balance itself fell by ¥56.6 trillion over nine months, from ¥589.4 trillion in January to ¥532.8 trillion in September. This trajectory reflects the continued contraction of the BOJ’s balance sheet as it normalizes policy. The pace of decline has varied from month to month, but the overall direction has consistently been downward.
[Flash] Short-Term Rates: Overnight Call Rate at 1.043%, Reflecting Ongoing Policy Normalization
The overnight call rate reached 1.043% in September, up 0.066 percentage points from 0.977% in August. This was its highest level in the past 12 months. The rate was broadly flat at 0.727–0.728% from January to May, then rose to 0.841% in June and hovered near 1% at 0.978% in July and 0.977% in August, before clearly exceeding 1% in September.
The gradual rise in short-term rates and the contraction in the monetary base are proceeding consistently as two aspects of the same policy direction. The trend in BOJ statistics suggests that the rate-setting phase shifted in June.
[Context] Position in the 12-Month Trend: The Most Tightening-Oriented Combination
September’s data mark the most tightening-oriented point in the past 12 months, combining a sharp monetary-base contraction with a high call rate. The table below compares key months.
| Month | Overnight Call (%) | MB (¥T) | MB YoY (%) |
|---|---|---|---|
| 2026-01 | 0.728 | 589.4 | −9.5 |
| 2026-06 | 0.841 | 559.2 | −13.7 |
| 2026-08 | 0.977 | 543.0 | −15.7 |
| 2026-09 | 1.043 | 532.8 | −15.2 |
The table shows that rising rates and a shrinking monetary base have proceeded simultaneously since the start of the year. September saw the rate reach a 12-month high, while the year-on-year contraction rate narrowed slightly from August.
[Context] Corporate Sentiment: Tankan DI Improves, Absorbing Changes in Financial Conditions
The BOJ Tankan business conditions DI has continued to improve despite tighter financial conditions. The large manufacturers’ DI reached 22 in Q2 2026, rising steadily from 14 in Q3 2025. The large nonmanufacturers’ DI also improved to 37, while the small manufacturers’ DI remained in positive territory at 9.
Outlook DIs were generally somewhat below current levels, at 14 for large manufacturers and 29 for large nonmanufacturers. This may reflect a cautious corporate outlook amid rising interest rates. However, these are Q2 data and do not directly capture changes in financial conditions in September.
[Context] Market Reaction: TOPIX Lacked Direction Throughout September
TOPIX followed a gradual downward trend over the month, declining from 4,181.86 at the start of September to 4,108.65 at month-end. It posted a sharp 2.40% drop on September 2, then moved back and forth within the 4,000–4,150 range.
After falling 1.72% on September 29, the index rebounded 1.67% the following day, with volatility rising in the second half of the month. As the call rate rose and the monetary base contracted, the equity market failed to establish a clear trend, ending the month with directionless price movements.
Outlook
Key issues to watch are how much further the call rate will rise above 1% and whether the contraction in the monetary base will accelerate again to exceed August’s 15.7% year-on-year decline. Money stock M2, the CGPI and lending rates were not released this time. Once published, these indicators will help assess the extent to which tighter financial conditions are spreading to the real economy. Lending rates, in particular, have been reported as N/A since February 2026; their resumption will provide an important signal of how rising rates are transmitting to the real economy. The next Tankan survey results will also be important in gauging corporate responses to changing financial conditions.
Glossary
| Term | Definition |
|---|---|
| Monetary base | The total amount of currency supplied by the BOJ, comprising cash in circulation and financial institutions’ current account deposits at the BOJ. A key indicator of the BOJ’s monetary policy stance. |
| Overnight call rate (uncollateralized overnight call rate) | The interest rate on unsecured overnight loans between financial institutions. A key short-term rate closely linked to the BOJ’s policy rate target. |
| Year on year | The percentage change compared with the same month a year earlier. Used to identify trends by reducing the effect of seasonal factors. |
| Business conditions DI | An index in the BOJ Tankan survey calculated by subtracting the percentage of companies reporting business conditions as “bad” from the percentage reporting them as “good.” It indicates corporate sentiment. |
| TOPIX (Tokyo Stock Price Index) | A stock index covering all issues listed on the Tokyo Stock Exchange and a key indicator of overall trends in Japan’s equity market. |
This column was automatically generated by AI integrating Bank of Japan statistics (monetary base, money stock, etc.), e-Stat public statistics, and market data as a monetary policy analysis resource. This is not a recommendation to buy or sell any financial instruments. Please make investment decisions at your own responsibility and consult professionals as needed.