05.01.202623:50:00UTC+00Japan's Monetary Base Contracts Further by 9.8% in December 2025

Japan's monetary base continued to shrink in December, with a year-over-year decline of 9.8%, according to data released on January 5, 2026. This marks a significant drop from November's -8.5%, indicating a further contraction in the country's financial liquidity.

The monetary base, which includes currency in circulation and current account deposits at the central bank, serves as a critical indicator of the financial landscape. The ongoing contraction reflects the challenges faced by Japan’s economy as it seeks to navigate a complex environment of global economic constraints and domestic policy adjustments.

This latest data point underscores the Bank of Japan's ongoing struggle to stimulate growth and inflation. As policymakers dissect this trend, questions loom over potential adjustments to monetary policy to combat the persistent deflationary pressures and steer the country towards economic recovery. The year-over-year comparison highlights December's deepening contraction, stepping down from November's decline, and posing potential implications for fiscal strategies moving forward.