The probability of the Bank of Japan raising interest rates in December has surged to 85%. Is Ueda Kazuo really taking it seriously this time?

Question

The prediction market of 【区块律动】 recently had something quite interesting happen.

There is a market about “Will the Bank of Japan raise interest rates in December?” Originally, the sides of “raising by 25 basis points” and “no change” were evenly matched, both at 50% to 50%. However, the situation changed dramatically yesterday— the probability of a rate hike soared to 85%, while the chance of no change dropped to only 14%.

The trigger for this wave of drastic changes was the speech given by Bank of Japan Governor Kazuo Ueda on December 1 in Nagoya. This time, his attitude was clearly much tougher than before, directly stating that they would “weigh the pros and cons of interest rate hikes and take action if necessary” at the meeting on December 18-19. More importantly, he specifically mentioned the weakening of the yen, which “could push up inflation more aggressively than before”—this basically makes it clear that action is on the table.

Comparing this to what he said in October makes it even more obvious. Back then, he was still worried about whether external risks like U.S. tariffs and trade policies would affect wage growth and corporate profits in Japan, taking an overall conservative stance. Now the direction has completely changed, shifting from focusing on “external risks” to focusing on “domestic inflation and exchange rates.”

Traders are reacting quickly, and now basically consider a 25 basis point increase in December as the default scenario.

WhaleWatcher · Accepted Answer

Wow, Ueda is really going to take action this time, an 85% probability is no joke!

NightAirdropper · Answer

Ueda really couldn&#39;t hold back this time, jumping directly from 50% to 85%, which shows the market has understood it clearly.

The reason of the yen depreciation is basically just a way of hinting, so wait for December 18.

GasFeeCrier · Answer

Ueda Kazuo is really not pretending this time, with an 85% probability of directly stating everything.

rekt_but_not_broke · Answer

Ueda is really going to stir things up this time, jumping from 50% directly to 85%, and the market can smell blood.

CoffeeOnChain · Answer

Uetani finally couldn&#39;t hold back, and an 85% probability indicates what? It really means they are going to raise interest rates. The yen has depreciated significantly, and inflation is also unbearable. If they don&#39;t take action, it really won&#39;t work. The market&#39;s reaction this time is considered reasonable, right?