Japan's Monetary Base Shrinks 13.8% for 26th Straight Month

Japan's monetary base contracted by 13.8% year-on-year in July, marking the 26th consecutive month of decline, according to data from the Bank of Japan.

The contraction is a result of the central bank's efforts to normalize its ultra-loose monetary policy and reduce liquidity in the financial system.

The BOJ has been reducing its massive bond purchases and allowing maturing assets to run off, which has led to a steady decline in the monetary base since the pandemic-era stimulus programs.

The BOJ's shift away from negative interest rates, begun in March 2024, is also contributing to the contraction.