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Bank of Japan Set to Raise Interest Rates to 0.75%

12/12/2025

28 2 Full Breakdown

Summary

Story summary

The Bank of Japan is expected to raise interest rates to 0.75% at its December 18-19 meeting.
The move follows years of ultra-low rates amid persistent inflation and a weakening yen.
Japanese government bond yields have risen, with short-term yields at their highest since 2007.
Foreign investors have withdrawn from long-term bonds ahead of the change, as the Nikkei 225 rose on optimism about the move.

History

Historical Context

The Bank of Japan raised interest rates to 0.5% in 2007, ending a prolonged period of near-zero rates following a 2.1% GDP growth that year. This shift reflects ongoing inflation and a declining yen, reminiscent of the late 1980s asset bubble and subsequent economic stagnation known as the Lost Decades, which profoundly impacted Japan's financial landscape and investment patterns.

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Story summary

The Bank of Japan is expected to raise interest rates to 0.75% at its December 18-19 meeting.
The move follows years of ultra-low rates amid persistent inflation and a weakening yen.
Japanese government bond yields have risen, with short-term yields at their highest since 2007.
Foreign investors have withdrawn from long-term bonds ahead of the change, as the Nikkei 225 rose on optimism about the move.

1 / 2