Overview
- The central bank’s short-term rate stands at 0.5%, and officials are weighing a move to 0.75% at the Dec. 18–19 meeting.
- Government sources say the administration would tolerate a December hike, with Finance Minister Satsuki Katayama indicating alignment on the economic assessment.
- The BOJ estimates Japan’s nominal neutral rate at roughly 1% to 2.5%, a wide range that complicates guidance on how high policy should eventually go.
- Markets now price roughly an 80% chance of a December increase, with the yen firmer and 10-year JGB yields climbing to about 1.94%.
- Policymakers will scrutinize wage data, the U.S. Federal Reserve’s decision and currency moves, as analysts flag the communication challenge over the pace of further tightening.