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11h ago

Bank of Japan Set to Lift Rate to 0.75%, Highest in Three Decades

Persistent inflation sets up a 0.75% move as investors watch for signals on the pace of further tightening.

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A Japanese flag flutters on the Bank of Japan building in Tokyo, Japan, March 15, 2016. The Bank of Japan kept monetary policy steady on Tuesday but offered a bleaker view on the economy and warned of waning inflation expectations, signalling that global headwinds that may justify deploying yet more stimulus ahead. REUTERS/Toru Hanai
The Bank of Japan is expected to hike interest rates Friday for the first time since January

Overview

  • The BOJ is widely expected to raise the short‑term policy rate to 0.75% from 0.5% at its Dec. 18–19 meeting, which would be the highest level since the mid‑1990s.
  • Governor Kazuo Ueda has telegraphed a December hike, and Reuters reports the bank will outline a stepwise, data‑dependent approach to any further increases.
  • Core consumer prices rose 3.0% in October after nearly four years above the 2% target, and a BOJ branch survey indicates firms foresee continued strong wage hikes next year.
  • Long‑dated Japanese government bond yields have reached multi‑year or record highs and the yen has weakened, reflecting concern over debt‑financed stimulus under Prime Minister Sanae Takaichi.
  • Finance Minister Satsuki Katayama signaled alignment with the BOJ’s stance, while officials say Tokyo stands ready to curb abrupt yen slides; analysts caution that a weak currency combined with higher rates could lift costs for households and companies.