The Bank of Japan's ETF Sales and 1.25% Interest Rate: What Will Reach Households?

The Bank of Japan will raise its policy interest rate to around 1.25% and, starting in January 2027, will increase the annual pace of its ETF sales from approximately 330 billion yen in book value to about 860 billion yen.

“Will they sell stocks all at once?” or “Will mortgage rates rise immediately?” When you break down the numbers, it becomes clear that both are moves to return monetary policy to normal while avoiding sudden changes.

ETF sales estimated to take 43 years

According to Bank of Japan documents, the annual ETF sales amount after the review will be approximately 2.46 trillion yen at market value. While this sounds like a large number, it accounts for only about 0.1% of the total trading value in the market. Based on the holdings as of the end of September 2026, it is estimated that it will take about 43 years to complete the sales.

At the current pace, it would have taken about 112 years. Even after the review, it is calculated to take 43 years. If the market becomes volatile, the sales amount can be adjusted or suspended.

What we should look at here is not the headline that “the Bank of Japan is selling,” but rather how much they are selling each year and under what conditions.

1.25% will not reach households in the same way

At the September Monetary Policy Meeting, the policy board decided by a majority vote to raise the policy interest rate by 0.25 percentage points to around 1.25%. Within the Bank of Japan, there were both opinions that prioritized responding to upward pressure on prices and dissenting opinions that were cautious about the timing of the rate hike.

The impact on households depends on individual contracts.

• Variable-rate mortgage: Check the timing for reviewing the base interest rate and the rules for recalculating repayment amounts.

• Fixed-rate mortgage: Even if the interest rate is fixed during the contract period, conditions may change upon refinancing or renewal.

• Deposits: If financial institutions raise interest rates, interest received will increase.

• Small and medium-sized enterprises and sole proprietorships: The burden of new borrowing or refinancing may increase.

Even with the same rate hike, the impact will be felt differently by those with high debt versus those with high savings.

The impact on stock prices is not one-directional either

ETF sales are a selling factor for the stock market. On the other hand, the Bank of Japan has clearly stated a pace that will limit the impact on the market. Rising interest rates also have both the aspect of increasing borrowing burdens and the aspect of boosting financial institution earnings and deposit interest rates.

Rather than concluding that “stocks will fall because the Bank of Japan acted,” it is closer to reality to look at where it affects corporate borrowing, exchange rates, prices, and profits.

Things to check now

If you have a mortgage, look not only at the interest rate figure but also at your repayment schedule and the review month stated in your contract. When your monthly repayment amount changes depends on the bank and the product.

If you use NISA, do not change your investment strategy based solely on the ETF sales headlines; instead, check how much your holdings are skewed toward Japanese stocks. The next factors to consider are whether the Bank of Japan will raise rates further, trends in wages and prices, and the actual results of the ETF sales.

The long process of monetary normalization will reach household contracts little by little.

*This article is for informational and educational purposes only and does not constitute advice on individual loan contracts or recommendations to buy or sell specific financial products.

List of Sources

• Bank of Japan, “Decision on Reviewing the Pace of ETF Sales (October 2026),” October 30, 2026, accessed November 6, 2026. https://www.boj.or.jp/mopo/mpmdeci/mpr_2026/k261030c.pdf

• Bank of Japan, “Minutes of the Monetary Policy Meeting (Held on September 17 and 18, 2026),” November 5, 2026, accessed November 6, 2026. https://www.boj.or.jp/mopo/mpmsche_minu/minu_2026/g260918.pdf