The Bank of Japan is expected to raise its key short-term interest rate from 0.5% to 0.75% at its upcoming meeting, pushing borrowing costs to their highest level in roughly 30 years. The move would mark the fourth consecutive rate hike as Japan continues its long-awaited exit from ultra-loose monetary policy.
The expected decision reflects growing confidence that inflation is becoming more sustainable, supported by steady wage growth and resilient domestic demand. Policymakers are also wary of prolonged yen weakness, which has increased import costs and amplified inflationary pressures across the economy.
If confirmed, the hike would signal a clear shift toward normalization, placing Japan closer to global peers after decades of near-zero rates. Markets are watching closely for guidance on whether further tightening could follow in 2026.