In a worrisome turn for Japan's economy, the country's monetary base has experienced an even sharper decline in November 2025. According to the latest data updated on December 1, 2025, the monetary base decreased by 8.7% on a year-over-year basis. This new figure marks a notable contraction from the -7.9% recorded in October 2025, continuing the downward trend seen over the past months.
The monetary base is a crucial indicator for assessing the supply of money available in the economy, which in turn influences economic growth, inflation, and interest rates. A shrinking monetary base suggests that the central bank may be tightening the supply of money, which can have ripple effects across the entire economy, potentially curbing spending and investment activities.
This ongoing contraction poses significant questions for policymakers at the Bank of Japan, who are tasked with managing economic stability amid a slew of other challenges, including global inflationary pressures and fluctuating international market conditions. The updated figures will likely prompt reevaluation of current monetary policies to combat the entrenched decline in the monetary base, with potential adjustments to curb the adverse effects on economic growth in the coming months.
