diff --git a/core/src/main/java/org/apache/calcite/rex/RexBuilder.java b/core/src/main/java/org/apache/calcite/rex/RexBuilder.java
index a062ba5d583a..73ef60d87f36 100644
--- a/core/src/main/java/org/apache/calcite/rex/RexBuilder.java
+++ b/core/src/main/java/org/apache/calcite/rex/RexBuilder.java
@@ -887,8 +887,15 @@ public RexLiteral makeExactLiteral(BigDecimal bd) {
       }
     } else {
       int precision = bd.unscaledValue().abs().toString().length();
-      relType =
-          typeFactory.createSqlType(SqlTypeName.DECIMAL, precision, scale);
+      if (precision > scale) {
+        // bd is greater than or equal to 1
+        relType =
+            typeFactory.createSqlType(SqlTypeName.DECIMAL, precision, scale);
+      } else {
+        // bd is less than 1
+        relType =
+            typeFactory.createSqlType(SqlTypeName.DECIMAL, scale + 1, scale);
+      }
     }
     return makeExactLiteral(bd, relType);
   }
diff --git a/core/src/test/java/org/apache/calcite/test/RexTransformerTest.java b/core/src/test/java/org/apache/calcite/test/RexTransformerTest.java
index 0f88f0c7e517..fce70c11b0ea 100644
--- a/core/src/test/java/org/apache/calcite/test/RexTransformerTest.java
+++ b/core/src/test/java/org/apache/calcite/test/RexTransformerTest.java
@@ -319,7 +319,10 @@ private RexNode isTrue(RexNode node) {
 
   /** Test case for
    * <a href="https://issues.apache.org/jira/browse/CALCITE-814">[CALCITE-814]
-   * RexBuilder reverses precision and scale of DECIMAL literal</a>. */
+   * RexBuilder reverses precision and scale of DECIMAL literal</a>
+   * and
+   * <a href="https://issues.apache.org/jira/browse/CALCITE-1344">[CALCITE-1344]
+   * Incorrect inferred precision when BigDecimal value is less than 1</a>. */
   @Test public void testExactLiteral() {
     final RexLiteral literal =
         rexBuilder.makeExactLiteral(new BigDecimal("-1234.56"));
@@ -336,8 +339,14 @@ private RexNode isTrue(RexNode node) {
     final RexLiteral literal3 =
         rexBuilder.makeExactLiteral(new BigDecimal("0.0123456"));
     assertThat(literal3.getType().getFullTypeString(),
-        is("DECIMAL(6, 7) NOT NULL"));
+        is("DECIMAL(8, 7) NOT NULL"));
     assertThat(literal3.getValue().toString(), is("0.0123456"));
+
+    final RexLiteral literal4 =
+        rexBuilder.makeExactLiteral(new BigDecimal("0.01234560"));
+    assertThat(literal4.getType().getFullTypeString(),
+        is("DECIMAL(9, 8) NOT NULL"));
+    assertThat(literal4.getValue().toString(), is("0.01234560"));
   }
 
   /** Test case for