Overview
- The Bank of Japan published a fresh estimate of the natural, or neutral, interest rate at roughly -0.9% to +0.5% using six different models.
- The bank said many model readings have crept higher, which it linked to a rebound in Japan’s potential growth and steadier gains in wages and prices.
- Officials will treat the estimate as one input for setting how much monetary support to provide toward the 2% inflation goal, while cautioning the metric is uncertain and hard to pin down.
- Revised output‑gap data now show demand outpacing supply for 15 straight quarters, reaching +0.45% in the third quarter of 2025 after an earlier estimate showed slack.
- Analysts say the range suggests the BOJ could lift its short‑term rate toward about 1% if inflation holds near 2% without stalling growth.