The Bank of Japan is expected to raise interest rates to the highest level in thirty years

BlockBeats News, December 18th. It is widely expected in the market that the Bank of Japan will raise the overnight call rate by 25 basis points to 0.75% at the policy meeting ending this Friday, marking the first rate hike since January of this year, and the benchmark interest rate will also rise to the highest level since 1995.

Under the leadership of Governor Haruhiko Kuroda, the policy committee is expected to unanimously approve this rate hike decision. In the two previous meetings, some committee members have already expressed support for a rate hike. Recent data shows that Japanese wage growth remains robust, and the impact of U.S. tariffs has been lower than expected, further strengthening market confidence in the rate hike.

Market participants point out that the current focus of investors has shifted to the Bank of Japan's stance on the future interest rate path. Insiders revealed that even if the rate rises to 0.75%, some within the central bank still believe that the "neutral rate" has not been reached, with some officials even considering 1% to be still low.

Analysts believe that if the central bank sends a more hawkish signal, it may help stabilize the yen but could also push up bond yields, putting pressure on the Japanese government as it formulates the budget for the next fiscal year. Overnight Index Swap (OIS) rates show that traders estimate the probability of a rate hike at this meeting to be around 95%, nearly double compared to the beginning of last month.

The policy statement is expected to be released around noon local time, and Kuroda will hold a press conference at 15:30.