Japan’s central bank set for pivotal moment on rates - Financial Times

The Bank of Japan is approaching a closely watched policy decision that could mark a turning point for its long-standing ultra-loose monetary stance. According to the Financial Times, the central bank is set for a pivotal moment on interest rates, a shift that would carry significance well beyond Japan's borders.

For years, the BOJ has kept borrowing costs exceptionally low while other major central banks raised rates sharply. That divergence helped weaken the yen and encouraged investors to fund positions in higher-yielding assets using cheap Japanese money. Any move away from that framework could ripple through global currency and bond markets.

Investors will be watching the BOJ's communication as much as the decision itself. Policymakers must weigh signs of domestic inflation against fragile growth and the risk of unsettling markets. The pace of any tightening, and the guidance that accompanies it, may matter more than the headline change. For now, the key question is whether this marks the start of a gradual normalization or a more cautious, one-off adjustment.