Review: BoJ Increase Its Policy Rates, And Keeps The Door Open To Further Tightening

By Brunello Rosa and Nato Balavadze

In this paper, we discuss:

• The Bank of Japan’s rate hike, marking the highest policy rate in three decades;
• The BOJ’s signal that real rates remain deeply negative, keeping conditions accommodative despite tightening;
• The BOJ to continue raising rates if its October’s economic and inflation outlook materialises;
• Market reaction, with JGB yields surging and the yen weakening.

Download PDF: BoJ Review December 2025