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Japan's Monetary Base Shrinks at Fastest Pace Since Nearly Two-Year Slump

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Japan's monetary base, which reflects the total volume of currency in circulation and current account deposits held at the central bank, slumped 15.7% year over year in August, according to data from the Bank of Japan on Wednesday.

The decline accelerated from the 13.8% contraction recorded in the previous month, marking the steepest drop since a downward trend began in September 2024. It was also worse than the consensus market forecast of a 13.5% drop tracked by Investing.com.

Of the total, banknotes in circulation fell at a faster rate of 2.0% versus 1.9% the previous month, while coins in circulation edged down 1.2%, compared with the 1.1% decline in July.

Current account balances slipped 18.9% in August, accelerating from the 16.6% drop in July. The pace of the drop in reserve balances also quickened to 18.0% in August from 15.3% the previous month.

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