On December 19, 2025, Morgan Stanley projects that at today's meeting, the Bank of Japan will increase interest rates by 25 basis points. This move will push the policy interest rate up to 0.75%, marking the highest level in three decades. After the rate hike, the Bank of Japan is likely to stress that the policy interest rate still lies below the neutral range. This serves to strengthen the message that the current monetary policy environment continues to provide support for the economy. In terms of policy guidance, it is anticipated that the bank will signal that any further tightening will be a gradual process and contingent on economic data. It will not adhere to a pre - established rate - hiking trajectory. This implies that although the Bank of Japan is moving forward with its policy normalization, it will refrain from implementing aggressive or hasty rate increases.