Bank of Japan
BOJ 0.75% Rate Hike: Ueda's Outlook, Market Reactions, and Bank Responses
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Following its December 19-20 policy meeting, the Bank of Japan raised its rate to 0.75%, prompting yen fluctuations, sustained high inflation, bank rate adjustments, and measured government support amid U.S. tariff concerns and shunto wage prospects.
Core inflation in Tokyo slowed to a 15-month low in January due to gasoline subsidies and easing food price pressures, offering some relief to consumers. Yet an underlying gauge excluding fresh food and fuel remained above the Bank of Japan's 2% target, indicating continued progress toward sustainable price growth.
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A Bank of Japan quarterly survey for December 2025 showed consumer sentiment rising for two straight quarters, while views on living conditions worsened for the first time in two quarters. The results suggest more people believe the overall economy is improving, though higher prices are burdening livelihoods.
The Bank of Japan’s quarterly tankan survey showed large manufacturers’ business sentiment index rising to 15 in December from 14 in September, marking a four-year high since December 2021. This improvement reinforces market expectations for a rate hike by the central bank. Nonmanufacturers’ index held steady at 34.
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Bitcoin traded below $89,000 on December 14, 2025, erasing gains from the Federal Reserve's recent rate cut as markets braced for the Bank of Japan's policy meeting. Traders cited concerns over a potential yen carry trade unwind and upcoming U.S. economic data. Ether showed weekly strength, while most altcoins declined.
Tokyo's core consumer price index rose 2.8% year-on-year in November, unchanged from October and beating market forecasts. This development strengthens the case for a Bank of Japan rate hike by year-end. Rising food prices were the primary driver.
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Early signs from Japan's 2026 wage negotiations point to solid pay hikes despite U.S. tariff pressures on profits. This bolsters the case for the Bank of Japan to raise interest rates further. BOJ Governor Kazuo Ueda has called for more data on the initial momentum of these talks.
Japan's household spending unexpectedly rises in November, signaling consumption recovery
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