The Bank of Japan (BoJ) recently signaled a more hawkish stance on its monetary policy path, indicating that the tightening trend will continue if economic conditions develop as expected. In a statement issued on December 19, the BoJ affirmed its readiness to continue raising the policy interest rate if economic growth and inflation are in line with current forecasts and show sustained improvement over time.
This is XEM as a significant step in the normalization of monetary policy in Japan, the last major economy in the world to have maintained negative interest rates and yield curve control for an extended period. After years of facing deflation and weak growth, the Bank of Japan (BoJ) now assesses that a positive spiral between wages, consumption, and prices is gradually forming, creating conditions for monetary policy to move towards a more "normal" state.
According to the Bank of Japan (BoJ), if the improving economic trend continues to strengthen, particularly through wage increases by businesses and stable household spending, inflationary pressures will no longer be temporary. In that case, raising interest rates will not only aim to control prices but also to ensure the long-term stability of the financial system, avoiding the accumulated risks of a prolonged overly loose monetary environment.
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On the same day, the Bank of Japan (BOJ) officially raised its benchmark interest rate to its highest level in 30 years, marking a significant turning point in the monetary policy of the world's third-largest economy. According to a statement following its latest policy meeting, BOJ Governor Kazuo Ueda said that all members of the policy board voted unanimously to raise the interest rate by 0.25 percentage points, bringing the benchmark rate to 0.75%.
