🇯🇵 Bank of Japan Poised for Historic Rate Hike
The Bank of Japan (BOJ) is reportedly set to raise its benchmark interest rate to 0.75%. This would mark the highest rate in three decades.
This significant move is anticipated at the BOJ’s monetary policy meeting on December 18–19. Policymakers are shifting away from Japan's long-standing ultra-loose monetary stance.
The increase, a 25 basis point rise from the current 0.5%, would be the first rate hike since January 2025. It signals a major shift for an economy historically characterized by near-zero interest rates.
BOJ Policy Board Support
Nikkei reports that over half of the nine-member policy board is expected to back the hike. This includes Governor Kazuo Ueda and the deputy governors.
No policy board members have publicly voiced opposition to the rate increase. The proposal also reportedly has strong backing within the Japanese government.
Governor Ueda and other senior BOJ officials have recently indicated openness to a tighter monetary policy. This strengthens expectations for a rate hike.
Market Implications of the Hike
A rate of 0.75% would signal increasing confidence in Japan's economic recovery. It also reflects a reduced reliance on extraordinary monetary stimulus.
This decision could influence global markets, particularly currency and bond flows. Japan is a major capital exporter, making its policy shifts impactful.
For investors, this move may affect the yen, Japanese equities, global bond yields, and overall market sentiment. The BOJ's announcement is a key event to watch this week.
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