BOJ set to rise interest rates in December, but the decision is made cautiously - Reuters poll

Most economists in a Reuters survey expect the Bank of Japan (BoJ) to raise interest rates at the December meeting, amid a sharply weakening yen that strengthens the case for tightening monetary policy. About 53% of economists surveyed expect short term interest rates to rise from 0.50% to 0.75%, the first increase since January.

The yen is currently the strongest depreciating currency in the G10 group, hitting a 10-month low against the USD and a record low against the euro, increasing the pressure of imported inflation. Although Japan’s economy contracted in the third quarter, domestic demand remains fundamentally stable. Experts believe that the momentum for wage increases in the upcoming spring wage negotiations will be a key factor in the decision to raise interest rates, while the wage increase in 2026 is expected to slow down compared to 2025.