🇯🇵 Japan Looks Set to Break Its 11-Month Rate Pause — This Week Could Be Historic
All eyes are on the Bank of Japan’s policy meeting on December 18–19, 2025 — when markets are pricing in a strong chance of the first rate hike since January. Most economists expect the BOJ to lift its policy rate from 0.50% to 0.75% at that meeting, potentially marking the start of a broader tightening cycle.
These expectations aren’t just talk — surveys show around 90% of analysts now see a December hike as likely, and many think rates could climb to 1.0% or higher by late 2026 if inflation and wage trends stay strong.
Kazuo Ueda, the governor, has hinted that rising long-term yields and underlying inflation trends are big deals when it comes to this decision, and they'll be keeping a close eye on things like corporate wage plans before the vote.
• Timing: Announcement expected at the end of the BOJ meeting on Dec 19 (JST).
• Expected move: ~25 basis points hike to 0.75% first, with potential further hikes ahead.
• Why now: Inflation persistent, long yields rising, and yen volatility becoming a bigger factor.
This is a rare monetary pivot for Japan — a nation that’s kept ultra-loose policy for years. If it happens, expect JPY strength, bond sell-offs, and equity rotation as global markets adjust to tighter Japanese policy.