Introduction: The Global "Inflation Watershed"
On December 19, 2025 (late evening of Dec 18, Beijing Time), Japan's Ministry of Internal Affairs and Communications officially released the Nationwide Consumer Price Index (CPI) for November. Coming just hours before the Bank of Japan's year-end interest rate decision, this data not only reveals the remarkable resilience of Japanese prices but also ignites market expectations that Japan is finally ready to bid farewell to the era of ultra-low interest rates.
As the only major economy in the world still maintaining near-zero interest rates, Japan’s inflation trajectory has transcended domestic concern, becoming a bellwether for global Carry Trades and capital flows.
I. Data Review: Three Major Drivers of "Stubborn" Inflation
According to the latest report, Japanese price performance in November exhibited significant "stickiness" across three key areas:
-
Core CPI Continuously Exceeds Targets
The nationwide Core CPI (excluding fresh food) rose 3.0% year-on-year, matching October’s figure. This marks over 40 consecutive months that inflation has remained above the BoJ’s 2% target.
-
"Core-Core" CPI (excluding fresh food and energy) rose 3.1%, indicating that inflationary pressure has shifted from energy costs to a broader range of consumer goods and services.
-
The "Tug-of-War" Between Subsidies and Prices
Despite the Japanese government’s new energy subsidy programs intended to ease household burdens, the "tail-end effect" of electricity and gas prices remains significant. Furthermore, as previous utility subsidies are phased out, the index has seen a passive technical lift.
-
Structural Rise in Food Prices
While rice price increases have slightly narrowed, processed foods and imported ingredients continue to face "cost-push" pressures due to the prolonged weakness of the Yen. Statistics show that the number of price-hike items among major Japanese food companies increased by nearly 60% year-on-year in November.
II. Monetary Policy Gambit: Will the BoJ Act in December?
This CPI report serves as the "final puzzle piece" for BoJ Governor Kazuo Ueda as he decides whether to raise short-term interest rates to 0.75%.
-
Ueda’s "Rate Hike Script"
The BoJ’s long-standing logic has been that inflation must be driven by "wage growth" rather than "cost-push" factors.
-
Bullish Signal: In 2025, average wage increases at Japanese firms reached 5.25%, achieving the preliminary "wage-price virtuous cycle."
-
Hawkish Stance: Ueda has repeatedly stated that if economic forecasts are met, the BoJ will "continue to adjust the degree of monetary support." Persistent 3% inflation provides an incredibly solid justification for a hike.
-
Unanimity in Market Expectations
Currently, the Overnight Index Swap (OIS) market shows the probability of a rate hike in December or January 2026 has soared above 90%. Economists generally believe the BoJ wants to avoid a repeat of the market turmoil seen after the July hike; thus, the "stable but high" November data offers the safest operational window for the central bank.
III. Deep Forecast: Impact on JPY and Global Markets
-
USD/JPY: A Strengthening Path for the Yen?
With the U.S. Federal Reserve (Fed) entering a rate-cut cycle and the BoJ moving toward hikes, the narrowing of the U.S.-Japan interest rate differential is inevitable.
-
Technical Analysis: USD/JPY is testing 10-month lows. If a rate hike is confirmed, the Yen is expected to recover toward the 145-148 range.
-
The End of the Carry Trade
Japan’s "cheap Yen" has long been a vital source of global liquidity. Once Japanese rates rise toward the 0.75%–1% level, capital previously borrowed in Yen to invest in U.S. equities or emerging markets will face massive repatriation, potentially triggering short-term volatility in global risk assets.
IV. 2026 Long-term Outlook: From Deflation to the "New Normal"
Long-tail Keywords: 2026 Japan Inflation Forecast, Impact of BoJ Hike on Stock Market, End-point of JPY Depreciation.
-
Inflation Expectations: Econometric models suggest that while government energy interventions may slow Japan's CPI to around 2.1% in 2026, Core-Core inflation is likely to remain above 2.5% due to rising service sector prices.
-
Shunto Wage Negotiations: The "Shunto" (Spring wage negotiations) in early 2026 will be the next critical milestone. If wage growth remains above 5%, Japan will officially solidify a persistent inflationary economy.
Conclusion: Strategic Digital Asset Positioning in a Rising Rate Era
November's CPI data once again underscores the inflationary pressures inherent in traditional fiat systems. Against the backdrop of Yen volatility and interest rate transitions, global investors are seeking more flexible ways to hedge macro risks.
Want to seize investment opportunities amidst macro-upheaval? You can establish your digital asset account via and allocate assets such as BTC, ETH, or regulated RWA (Real-World Assets) on the . By leveraging the decentralized nature of digital assets, you can effectively hedge against systemic risks brought by fiat monetary policies.