Bank of Japan to Raise Rates to 0.5% at January 23-24 Meeting, Reaching 17-Year High

Jan 19, 2025, 06:30 AM

The Bank of Japan (BOJ) is widely expected to raise its policy rate from the current 0.25% to 0.5% during its monetary policy meeting on January 23-24, 2025. This would mark the third rate hike in the current economic cycle, and the first since July 2024, elevating Japan’s uncollateralized overnight call rate to a 17-year high. Market probabilities for the hike have reached as high as 99%, reflecting heightened expectations. BOJ Governor Kazuo Ueda has emphasized positive economic and wage growth, including a 2.7% year-over-year increase in base salaries, the largest in 32 years, as key factors supporting the decision. Inflationary pressures in Japan have also been rising. The BOJ's final decision may consider potential market impacts from U.S. President Donald Trump’s January 20 inauguration earlier in the week.