Bank of Japan Poised to Signal Further Rate Hikes Next Week, Pace Contingent on Economic Response

The Bank of Japan (BOJ) is anticipated to signal a commitment to further interest rate hikes at its upcoming policy meeting next week, according to three informed sources on December 12. While the central bank is poised to continue monetary tightening, the pace of subsequent increases will reportedly be contingent on the Japanese economy's response to each rate adjustment. BOJ Governor Kazuo Ueda has largely pre-announced a December hike, leading markets to almost fully price in a potential increase from 0.5% to 0.75%. The BOJ will base future decisions on assessing the impact of previous hikes on bank lending, corporate financing, and broader economic activities, rather than relying on precise forecasts for a neutral rate level.