MNI BoJ Preview-Dec 2025: Hike Fully Priced

EXECUTIVE SUMMARY: 

• The BOJ is widely expected to raise the policy rate by 25bp to 0.75% at the December 18–19 meeting, with Governor Ueda’s recent remarks signalling increased confidence in the outlook for growth, inflation and wage momentum.
• Ueda has indicated the BOJ will assess the “pros and cons of raising the policy interest rate,” while Policy Board members say conditions for a hike are “gradually falling into place,” though confirmation of spring wage momentum remains key.
• Market pricing has shifted as the Takaichi administration appears willing to tolerate a hike despite its reflationary stance, with analysts arguing that monetary tightening can “substitute for fiscal easing” amid rising JGB yields.
• Some caution remains, with analysts noting that limited wage data ahead of the meeting could prompt the BOJ to delay a hike until more information emerges later in December or January.
• Beyond December, attention will focus on guidance around the neutral rate, which Ueda has described as “1–2.5%,” signalling that policy normalisation is likely to continue gradually rather than end at 1%.

FOR THE FULL PUBLICATION PLEASE USE THE FOLLOWING LINK:BOJ Preview - Dec 2025.pdf