The probability of a rate hike by the Bank of Japan in December has surged to 85%, making monetary policy tightening almost a certainty.
BlockBeats News, December 2, according to PolyBeats monitoring, yesterday's prediction market on "Will the Bank of Japan make an interest rate decision in December 2025?" saw a dramatic shift in the probabilities of the originally balanced "25 bps rate hike" and "unchanged" outcomes: the probability of a rate hike surged from 50% to 85%, while the probability of "unchanged" plummeted from 50% to 14%.
The direct driver of this market earthquake was Bank of Japan Governor Kuroda's speech on December 1 in Nagoya. Kuroda's speech this time sent out the clearest hawkish signal to date, with his language shifting from a previously cautious stance to an active policy normalization. He explicitly stated that the Bank of Japan will "weigh the pros and cons of raising the policy rate and make a decision as appropriate" at the meeting on December 18-19. He also emphasized that the yen's weakness is a trend that "may push up inflation more than in the past," clearly indicating that the central bank is prepared to take action in the face of inflation and exchange rate pressures.
This contrasts sharply with Kuroda's language in his speech in October 2025: previously, he emphasized the uncertainty of the external economy, particularly the potential drag of U.S. trade policy and tariff risks on Japanese wage growth and corporate profits. This risk-averse attitude led the prediction market to adopt a generally cautious view on rate hikes during November. However, Kuroda's recent speech shifted the policy focus from "external risks" to a focus on "internal inflation and exchange rate pressures," quickly prompting traders to see a 25 bps rate hike in December as the baseline scenario.
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