FX.co ★ Japan’s Monetary Base Decline Deepens Slightly in July, Signals Ongoing Tight Liquidity Conditions

Japan’s monetary base continued to contract in July 2026, with the year-over-year decline edging slightly deeper, underscoring persistent tightness in underlying liquidity conditions. According to the latest data updated on 3 August 2026, the monetary base fell 13.8% from a year earlier, compared with a 13.7% drop recorded in June.

Both readings are measured on a year-over-year basis, comparing each month with the same period a year earlier. The marginal move from -13.7% in June to -13.8% in July suggests that while the pace of contraction has not accelerated sharply, the Bank of Japan’s balance-sheet environment remains firmly in negative territory. This continued decline in the monetary base is likely to stay on investors’ radar as they assess liquidity conditions and the broader trajectory of Japan’s monetary stance over the coming months.