This guide clearly explains how movements in the policy rates of the U.S. and Japanese central banks affect everyday finances, using the mechanisms behind rate hikes and cuts and the objectives of both countries. It summarizes the schedules for Bank of Japan and Federal Reserve meetings and the key points regarding their indirect impact on investment decisions.
A policy rate is the rate set by a central bank for monetary policy purposes. Interest is the rental cost of money: deposits earn interest, while borrowing incurs interest charges. In Japan, the uncollateralized overnight call rate is used as the policy-rate target, while in the United States the federal funds rate is used. The Bank of Japan and the Federal Reserve hold meetings to decide how rates will move.
Rate hikes are expected to curb inflation, tend to push up lending rates, restrict funding by companies and individuals, and act as a brake on the economy. Rate cuts, on the other hand, may encourage lending and stimulate capital investment and consumption, but can also increase inflationary pressure. Share prices and foreign exchange rates do not move solely because of interest rates; they also fluctuate depending on expectations and market reactions.
The Bank of Japan targets price stability through an inflation rate of 2%, while the Federal Reserve has a dual mandate of maximum employment and price stability. The effects of rate hikes and cuts on daily life include movements in share prices, the possibility of yen appreciation or depreciation, and changes in deposit and loan rates.
The article also explains the meeting schedule and how to check it. The schedules for the second half of 2026 and 2027 can be identified by referring to the charts. It explains how to check the schedule of economic indicators, including Bank of Japan monetary policy meetings and FOMC meetings, on the SBI Securities website.