BOJ to weigh 'pros and cons' of rate hike in December

1/12/2025 11:56

The Bank of Japan will consider the "pros and cons" of raising interest rates at its next policy meeting, its governor Kazuo Ueda said on Monday, providing the strongest signal yet that a hike could be on the cards later this month.



The remark pushed up the yen and bond yields, as markets priced in the likelihood the central bank will raise its policy rate at the December 18-19 meeting.

With uncertainties on the impact of U.S. tariffs receding, the likelihood of the BOJ's economic and price projections being met is increasing, Ueda said, signalling the BOJ's conviction that conditions for raising rates were falling into place.



"The BOJ is at the stage where it should examine whether firms' active wage-setting behaviour will continue," which was key to how soon it would raise interest rates, Ueda said.



Labour shortages are becoming more acute, corporate profits remain at high levels on the whole and Japan's corporate lobby has called for anchoring solid wage gains, he said in a speech to business leaders in Nagoya.



The BOJ was actively collecting information on wage hikes with surveys conducted at firms by its head office and branches, Ueda added.