BREAKING: MARKET VOLATILITY ๐ก
๐ฏ๐ต The Bank of Japan (BOJ) is expected to raise its benchmark interest rate to 0.75%, marking the highest level in three decades, according to a report by Nikkei. The decision is likely to be finalized at the BOJโs upcoming monetary policy meeting on December 18โ19, as policymakers move closer to normalizing Japanโs ultra-loose monetary stance.
If implemented, the move would represent a 25 basis point increase from the current 0.5% policy rate, and the first rate hike since January 2025, ending an 11-month pause. A rate of 0.75% would also be Japanโs highest since 1995, underscoring a historic shift for an economy long associated with near-zero interest rates.
Broad Support Within the BOJ
According to Nikkei:
More than half of the nine-member policy board, including BOJ Governor Kazuo Ueda and the deputy governors, are expected to support the hike. No policy board member has publicly opposed the move. The proposal reportedly has broad backing within the Japanese government.
Governor Ueda and other senior BOJ officials have recently signaled openness to tighter policy, reinforcing expectations that a rate increase is now the base case.
Why This Matters
A move to 0.75% would:
Signal growing confidence in Japanโs economic recovery
Reflect reduced reliance on extraordinary monetary stimulus
Potentially influence global markets, particularly currency and bond flows, given Japanโs role as a major capital exporter
For investors, the decision could have implications for the yen, Japanese equities, global bond yields, and broader risk sentiment.
The BOJโs policy announcement later this week is now shaping up to be one of the most closely watched central bank decisions of the year, both domestically and globally.
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