Will the Bank of Japan raise interest rates next week?

Market expectations are high, with traders assigning an 80% probability to a 25-basis-point rate hike at the upcoming meeting.

What is causing Japanese bond yields to climb?

Rising expectations that the Bank of Japan will tighten monetary policy by raising interest rates are driving JGB yields higher.

What did BOJ Governor Kazuo Ueda say about policy?

Governor Ueda indicated that the central bank would consider the pros and cons of tightening policy at its upcoming meeting.

Home / Business and Economy / BOJ Poised for Rate Hike: JGB Yields Surge

BOJ Poised for Rate Hike: JGB Yields Surge

8 Dec

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Summary

Japanese bond yields reached multi-year highs amid rate hike expectations.
Traders assign an 80% probability to a 25-basis-point interest rate increase.
Governor Ueda indicated that tightening policy would be considered next week.

BOJ Poised for Rate Hike: JGB Yields Surge

Japanese government bond yields have climbed to multi-year peaks, driven by escalating market expectations that the Bank of Japan (BOJ) will implement an interest rate hike at its forthcoming meeting. Traders are now pricing in an approximately 80% probability for a 25-basis-point increase, signaling growing confidence in the central bank's shift towards monetary tightening.

These expectations gained significant traction following remarks by BOJ Governor Kazuo Ueda earlier this month. He stated that policymakers would "consider the pros and cons" of tightening policy at the upcoming session. The government reportedly anticipates and would tolerate such a move, according to news reports.

Yields across various maturities saw notable increases. The two-year yield reached its highest point since July 2007, while the five-year yield hit a high not seen since June 2008. Longer-dated yields also experienced sharp upward movements, with the 20-year and 30-year yields climbing significantly.