The probability of a rate hike by the Bank of Japan on December 19 is as high as 94%

The Bank of Japan's upcoming monetary policy meeting is scheduled for December 18-19, with the decision and interest rate results announced on December 19 (Friday). The market is pricing in a rate hike probability of about 94% (implied by OIS), with institutions and news sources consistently expecting a 25 basis point increase, raising the policy rate from 0.5% to 0.75%.

- Meeting dates: Meeting on December 18, announcement on December 19, marking the last monetary policy meeting of the year.

- Rate hike probability: The market is highly unified, between 90% and 94%, almost fully priced in.

- Main expectation: A rate hike of 25bp to 0.75%, a new high since 1995, and the first rate hike in 2025.

- Driving factors: Inflation consistently above 2%, pressure from yen depreciation, improvement in wage negotiations, and early hawkish signals from the central bank's leadership.