The Bank of Japan is set to raise interest rates in December, marking a significant shift in monetary policy. This move comes after careful negotiations between Bank of Japan chief Kazuo Ueda and Prime Minister Sanae Takaichi, who initially expressed skepticism about rate hikes. Ueda successfully convinced Takaichi of the necessity, highlighting the risks of inflation and a weakening yen. The upcoming quarter-point increase will bring the policy rate to zero point seven five percent, a level not seen in three decades. Uedas speech earlier this week essentially pre-announced the hike, leading markets to price in an eighty percent chance of the increase. The breakthrough in negotiations came during a meeting between Ueda and Takaichi on November eighteenth, with Takaichi acknowledging the Bank of Japans plan for a smooth transition toward its price goals through gradual rate hikes. However, the Bank of Japan faces the challenge of communicating its longer-term rate hike strategy, as theres no clear consensus on Japans neutral interest rate.

The Daily News Now! — Every city. Every story. AI-powered.

---

Hosted on Acast. See acast.com/privacy for more information.