The Bank of Japan (BoJ) is widely expected to raise its benchmark interest rate again by December 2025, a Reuters poll shows, as fresh data reveals a gradual but persistent rise in core inflation. The combination of hawkish central bank expectations and a 1.7% annual core CPI print for June is cementing views that Japan’s era of ultra-loose monetary policy is nearing its end.
According to the October Reuters survey of over 30 economists, more than 70% forecast that the BoJ will lift its short-term policy rate from 0.25% to at least 0.50% by the end of the year. While a minority see a move at the October 30–31 meeting, the majority point to the December 18–19 gathering as the most likely timing. This would mark the third hike of 2025, following increases in March and July.
The outlook is supported by Japan’s core CPI, which excludes fresh food, rising to 1.7% year-on-year in June from 1.5% in May, matching forecasts. Energy costs remain elevated, and underlying inflation—stripping out both food and energy—also accelerated, signaling that demand-driven price pressures are building. BoJ Governor Kazuo Ueda has repeatedly stressed that policy normalization depends on sustainable, wage-backed inflation, and the June data provides further evidence of such a trend.
A December rate hike would deepen the divergence between the BoJ and its global counterparts. While the Federal Reserve and European Central Bank are cutting rates, Japan’s tightening path is expected to strengthen the yen, impact government bond yields, and potentially weigh on risk assets worldwide. For crypto markets, tighter global liquidity conditions typically present a headwind, making this macro shift a key factor for digital asset investors to watch.
