JAPAN — INTEREST RATE SHIFT IN FOCUS 🇯🇵
17 December 2025
The Bank of Japan has signaled that policy rates could rise to 0.75%, the highest level in three decades — a clear sign of growing confidence in inflation durability and economic recovery.
Key signals
Business sentiment remains firm
Export conditions continue to improve
Policymakers appear increasingly comfortable moving away from ultra-loose settings
Market implications
JPY: Potential strength as yield differentials narrow
Bonds: Higher yields, increased volatility
Global markets: Reduced liquidity tailwinds, higher sensitivity to macro shifts
Bottom line
This marks a meaningful policy transition. The era of ultra-low Japanese rates is nearing its end — and global investors should be paying close attention.
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