Overview
- Market pricing and multiple reports indicate a likely 25-basis-point hike to 0.75% at the Dec. 18–19 meeting, with odds near 80–90%.
- Governor Kazuo Ueda told parliament the neutral rate can only be estimated within a wide range, with BOJ work placing Japan’s nominal neutral rate around 1.0% to 2.5%.
- Finance Minister Satsuki Katayama described communications with Ueda as positive, and Economic Revitalisation Minister Minoru Kiuchi said specific policy choices are for the BOJ to decide.
- Long-dated JGB yields have climbed to multi-year highs, with the 10-year near 1.94% and concerns rising over heavier fiscal issuance tied to Prime Minister Sanae Takaichi’s stimulus plan.
- Former BOJ officials expect the bank to retain constructive ambiguity on the longer-term path to avoid provoking further bond-market stress while preserving policy flexibility.