Sources: BOJ rate hike in December almost certain, government will not intervene

Odaily Planet Daily News: According to Reuters, three Japanese government sources said that the Bank of Japan is likely to raise interest rates in December, and the government is expected to tolerate this decision. The sources said that the Bank of Japan appears ready to raise its policy rate from 0.5% to 0.75%, a signal also conveyed by Governor Kazuo Ueda in his speech on Monday. This would be the first rate hike since January this year. One of the sources said, “If the Bank of Japan wants to raise rates this month, let them decide for themselves. This is the government’s position.” He added that a rate hike by the central bank this month is almost a certainty. On Monday, Ueda stated that the Bank of Japan will weigh the “pros and cons” of raising rates this month, suggesting a strong likelihood of a rate hike at the December 18-19 meeting. These remarks have led the market to price in about an 80% probability of a rate hike in December, though some market participants are watching to see how the dovish administration of Prime Minister Sanae Takaichi might respond. The market’s focus may shift to the central bank’s language regarding how far it ultimately intends to raise rates, a topic on which Ueda remains ambiguous for now.