The Bank of Japan (BoJ) is expected to make the biggest interest rate hike in 18 years, AFP reports.
Although other central banks have raised borrowing costs in recent years, the JCB has remained an exception, maintaining an ultra-loose stance in an attempt to boost growth and inflation.
In March last year, the bank concluded that Japan's "lost decades" of economic stagnation and static or falling prices were over, finally raising interest rates above zero.
This first hike since 2007 was followed by another in July, the second of which surprised investors and caused major market volatility.
This time, the central bank prepared markets for another hike, and about three-quarters of economists surveyed by Bloomberg News predict one.
Insiders said bank officials see a high probability of a rate hike on Jan. 24 if there aren't too many negative surprises from U.S. President Trump.
The central bank is expected to raise its key lending rate by 25 points to 0.50 percent, the highest level since 2008, when the bank cut its rate from 0.75 percent during the global financial crisis.
The central bank is also expected to signal more interest rate hikes in the future if its expectations for the world's fourth-largest economy come true.
"Since there has been no market turmoil since Trump took office," the conditions for a key rate hike by the JGB have been met," said Ko Nakayama, chief economist at Okasan Securities Research.
"Raising by only 25 basis points to 0.5 percent will not lead to a cooling of the economy," he added.
Japan's economic growth slowed between July and September, partly because of one of the strongest typhoons in decades and warnings of a strong earthquake that didn't materialize.
"The Bank of Japan is reducing monetary policy support despite poor economic data. The main reason is the weak yen," Moody's Analytics said in a note. | BGNES
