TLDR
Markets now expect the Bank of Japan to raise its policy rate by 25 basis points to 0.75% at the Dec 1819 meeting and to hint at further gradual hikes, the highest in about 30 years.
- A 0.75% policy rate is the base case, up from 0.50%, a three?decade high per a Reuters report carried by Investing.com. See rate to 0.75%.
- Guidance has turned more hawkish, with focus on the 2026 path and data?dependent increments. See policy path focus.
- A possible balance sheet shift is also in view, with reports the BOJ could begin selling ETFs in early 2026. See ETF sales plan.
Deep Dive
1. Hike To 0.75%
The consensus shifted to a 25 bp hike to 0.75%, which would be the highest policy rate in roughly three decades and the second increase this year. Coverage emphasizes inflation above the 2% target for nearly four years as justification for normalization, and points to this weeks meeting as the decision window. See three?decade high and the meeting timing.
A confirmed 0.75% could support the yen and lift global yields at the margin, a headwind for long?duration risk assets.
2. Path And Guidance
Expectations also shifted toward ongoing, data?dependent hikes rather than a one?off move. Reports say the BOJ will pledge to keep hiking, with markets specifically watching how policymakers frame the 2026 trajectory at the press conference. See pledge to keep hiking and the 2026 path focus.
If guidance implies a steady path toward a neutral rate, the yen carry trade becomes less attractive and cross?asset volatility can rise, including in crypto during risk?off waves.
3. Balance Sheet Shift Risk
Alongside rates, a potential structural shift is on the table. Articles flag an intention to begin selling a large ETF portfolio as early as January 2026, reversing years of equity support and tightening financial conditions beyond the policy rate. See ETF sales plan. A stronger yen plus less BOJ demand for domestic assets could amplify global spillovers. Recent analysis also notes BOJ hawkishness has weighed on the US dollar via the yens index weight. See yen impact on DXY.
If both rate hikes and asset sales progress, the policy stance tightens on two fronts, increasing the chance of periodic de?risking across equities and crypto.
Conclusion
BoJ rate expectations shifted from a hold to a 25 bp hike to 0.75% with a more hawkish, data?dependent path, and markets are also considering balance sheet normalization next year. That combination tends to support the yen, nudge global yields higher, and raise cross?asset sensitivity. For crypto, watch yen moves and policy guidance tone, since stronger JPY and tighter global liquidity can translate into choppier risk appetite.
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