BOJ Governor Signals Possible December Rate Hike

Bank of Japan Governor Kazuo Ueda signaled on Monday that the central bank could raise interest rates at its upcoming December 18-19 policy meeting, provided economic and inflation trends align with forecasts, prompting a surge in Japanese government bond yields to multiyear highs and a strengthening of the yen against the dollar.

Speaking at a business meeting in Nagoya, Ueda stated that the likelihood of the bank's baseline scenario for growth and inflation being realized is gradually increasing. "The central bank will consider the pros and cons of raising the policy rate and make decisions as appropriate," he said. He emphasized that even with a potential hike from the current 0.5 percent rate, overall financial conditions would remain accommodative, allowing for measured adjustments to support stable growth without braking the economy.

Ueda's remarks highlighted persistent inflationary pressures in Japan. He noted that core consumer inflation is projected to stay roughly aligned with the bank's 2 percent target over the second half of its three-year forecast period, though it may dip temporarily below that level in the first half of fiscal 2026 before rebounding. Frequent...