Overview
- Finance Minister Satsuki Katayama said policy specifics are entrusted to the central bank, reinforcing reports that the government would tolerate a hike at the Dec. 18–19 meeting from 0.5% to 0.75%, which would be the first increase since January.
- Governor Kazuo Ueda told parliament the neutral rate is hard to pin down, with the BOJ’s nominal estimate spanning 1% to 2.5%, leaving uncertainty over how far tightening should ultimately go.
- Long-dated Japanese government bond yields hit multi-year highs, with the 10-year near 1.94%, the 20-year around 2.94%, and the 30-year at a record 3.436%, intensifying the policy and market trade-offs.
- Former BOJ officials expect the bank to lean on “constructive ambiguity” rather than publish a precise new neutral-rate figure, warning that overtly hawkish signals could trigger another jump in yields.
- Markets have largely priced a December move and see rates around 1.5% by mid-2027, while Prime Minister Sanae Takaichi’s roughly $137 billion stimulus and heavier bond issuance stoke investor concerns about fiscal sustainability and demand for long-dated debt.