Last week, the US Federal Reserve cut the federal funds rate by a quarter percentage point, and now all eyes are on the Bank of Japan. Financial experts expect the central bank to raise its short-term interbank rate this week.
The Bank of Japan is scheduled to hold its monetary policy meeting on December 18-19, 2025. Markets are bracing for a possible rate hike from 0,5% to 0,75%, reflecting the world’s latest negative interest rate regime.
The Bank of Japan continues to maintain negative short-term interest rates and tight control over long-term bond yields, even as other major central banks have moved to raise rates.
This strategy involved borrowing cheap yen and investing it in high-yielding assets abroad. The tactic worked as long as yen financing remained exceptionally cheap and the currency remained stable or depreciated.
Currently, the leading prediction markets are polymarket и Kalshi indicate a high probability that the Bank of Japan will raise the rate by 25 basis points.
The vast majority of users polymarket The Bank of Japan is predicted to raise the interest rate by a quarter percentage point, with a probability of approximately 98%. All other scenarios are unlikely.
Data Kalshi
Traders Kalshi share this assumption. A rate hike of 21–40 basis points at the Bank of Japan’s meeting next week is estimated at 95% probability, while the probability of no change is around 2%.
Many believe this particular rate hike could impact stocks and cryptocurrencies. Some observers expect Bitcoin to decline if the Bank of Japan raises its interest rate. One comment on social media suggested that «every rate hike by the Bank of Japan leads to a drop in Bitcoin of more than 20%.»