Markets are awaiting the Bank of Japan’s meeting on Friday morning, December 19th, with expectations rising that the central bank will raise interest rates by 25 basis points for the second time this year, following the January hike that brought rates to 0.75%, their highest level in 30 years.

The Bank of Japan began raising its near-zero interest rate in March 2024, followed by another increase in July of the same year, and then again in January. This comes at a time when other central banks around the world are moving towards lowering interest rates. Markets will be focused on Bank of Japan Governor Ueda’s remarks regarding the future direction of interest rates next year, especially given the recent appointment of Sanae Takaichi, a proponent of easing policies, as Prime Minister.