Bank of Japan Signals Possible December Rate Hike

Bank of Japan Governor Kazuo Ueda signaled a potential rate hike in his Nagoya speech on December 1, 2025, prompting a sharp shift in market expectations.

This hawkish stance impacts global financial markets, altering predictions and influencing Japanese government bonds and yen-based assets.

BoJ Sets Stage for First Rate Hike in Over a Decade

Kazuo Ueda’s speech in Nagoya emphasized the potential for a 25 bps rate hike at the Bank of Japan’s upcoming meeting. Shifting his previously cautious tone, Ueda addressed internal inflation and the yen’s weakness. “The yen’s weakness is pushing inflation higher,” said Ueda. View full minutes of the meeting.

Markets responded quickly to Ueda’s signals. The probability of a rate hike soared to 85%, reversing the earlier 50% chance of no change. This hawkish stance reflects a strategic shift to counteract inflationary pressures. “The probability for a 25 basis points rate hike surged from 50% to 85% following Ueda’s speech,” noted a market analyst from PolyBeats.

Global market reactions included adjustments in yen-based assets and Japanese government bonds. As noted by PolyBeats, traders are now treating a rate hike as the baseline expectation, in stark contrast with earlier projections.

Global Impact and Strategic Analysis of BOJ’s New Policy

Did you know? The last significant rate hike by the Bank of Japan was over a decade ago, highlighting the magnitude of the current shift in policy approach.

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Coincu researchers suggest the BOJ’s shift may affect financial markets globally. Potential outcomes include higher bond yields and currency volatility. Analysts argue this hawkish tone mirrors global inflation concerns, driving policy recalibration.