Will the Bank of Japan announce a 25 bps increase at the September 2026 meeting?

Prediction markets put the probability at 36%: Will the Bank of Japan announce a 25 bps increase at the September 2026 meeting. Currently, markets are divided (36% YES, 64% NO). The Bank of Japan is expected to deliver a 25 bp hike on 19 December.

What’s Happening

The Bank of Japan’s monetary policy trajectory has become a central focus for global markets, with the central bank having already executed a series of rate hikes through 2025 and into 2026. After raising the benchmark rate by 25 basis points to 0.75% in December 2025—the highest level since 1995—the BoJ followed with another 25 bps increase to 1.00% in June 2026, according to a CNBC report. That June move was widely anticipated, with money markets pricing in a near-certain probability of the hike, and it marked the first time in three decades that Japanese short-term rates reached the 1% threshold. The central bank’s actions have been driven by a sustained recovery in manufacturing, robust export growth, and inflation hovering around 3%, conditions that policymakers have cited as evidence the economy is on a firm recovery path [CNBC, Dec 19].

Looking ahead to the September 2026 meeting, the question of whether the Bank of Japan will announce a 25 bps increase at the September meeting remains a key source of uncertainty. A Reuters poll conducted in December 2025 found that a strong majority of economists expected the BoJ to hike to 0.75% in December and then reach at least 1.0% by the end of September 2026, with the median forecast for the end-2026 rate holding at 1.00%. However, that same survey noted a minority of economists who saw a slower pace of normalization. More recent commentary from BoJ Deputy Governor Shinichi Uchida in June 2026 suggested that market participants had already priced in the June hike, and he indicated that policymakers tend to act cautiously and avoid surprising investors, which could imply a pause in September to assess the impact of cumulative tightening [Reuters, Dec 11].

The market’s current assessment, with a 36% probability assigned to a 25 bps increase at the September 2026 meeting, reflects a cautious outlook following the back-to-back hikes in December and June. A July 2026 preview from Newsquawk noted that the BoJ was widely anticipated to keep rates unchanged at its meeting that month, with money markets pricing around a 96% probability of holding at 1.00%, following the June hike and ahead of the release of the Outlook Report containing board members’ median forecasts for GDP and core CPI. The BoJ’s own projections, released in December 2025, indicated that core inflation is likely to decelerate below 2% from April to September 2026, which could reduce the urgency for another hike in September. The key factors to watch will be the bank’s quarterly outlook, wage data, and any shifts in the yen’s value, as policymakers weigh the risk of overtightening against persistent inflationary pressures [Tradingview, Jul 26].

Traded on Polymarket — $50K Volume

Lower-volume market on Polymarket ($50K). Wider spreads expected — enter with limit orders and be aware of slippage risk. Currently 36c YES.