Inflation in Japan remains high — inflation excluding fresh products has exceeded the Bank of Japan's (BoJ) target (2%) for 43 consecutive months.

Several factors are pushing prices higher: a weakened yen (which raises import costs), rising wages, and high food costs.

📅 Upcoming decision: December meeting

The BoJ will meet on December 18–19, 2025, to decide on its monetary policy.

An increase in the key interest rate from 0.50% to 0.75% seems likely — this would be the highest level in 30 years.

However, according to the bank's management, a rise would not necessarily mean a lasting tightening: the BoJ is considering a "technical" adjustment, without committing to a prolonged cycle of increases.

🎯 Why a policy shift now?

Persistent and durable inflation, not only for food products but also for imported goods.

Rising wages and the anticipation that this trend could continue — which would put further pressure on prices.

A weak yen exacerbates the cost of imports, contributing to inflation — this is an important factor considered by the BoJ.

⚠️ Challenges and uncertainties

Although inflation is high, the BoJ remains cautious — it wants to ensure that price increases are sustainable and that wage growth continues before committing to a tightening cycle.

A too-rapid tightening could weigh on consumption and growth, especially as Japan combines persistent inflation with a backdrop of fiscal stimulus.

The balance to strike: stabilizing prices without breaking the fragile economic recovery.

🧮 What to expect in the short term

A moderate increase in key interest rates very likely to 0.75% during the December meeting.

Cautious communication from the BoJ — the governor has already indicated that a rise does not equate to a tightening cycle.