🇯🇵 Bank of Japan Rate Hike Signals Are Getting Stronger
Markets are now pricing in a 25 bps rate hike at the Bank of Japan’s Dec 18–19 meeting, which would push Japan’s policy rate up to 0.75%.
If this happens, it would be a major shift for Japan: • First rate hike in almost a year • Highest interest rate seen in decades • Clear move away from ultra-easy money policies
Why is the BoJ under pressure? • Core inflation is hovering near 3%, well above the 2% target • Wage growth is becoming more consistent, not temporary • The weak yen is becoming harder to control
Why global markets should care For years, Japan has been the cheapest source of liquidity worldwide. A rate hike could strengthen the yen and start unwinding carry trades. That kind of shift doesn’t stay local — it can ripple through FX, bonds, equities, and crypto, tightening global liquidity.