Bank Of Japan Considers Interest Rate Hike To 0.75%

Summary:

Japan's central bank might increase interest rates to 0.75% tomorrow, December 19, 2025, in Tokyo, marking the highest level since 1995 according to Bank of Japan sources.

A possible hike could impact global markets by strengthening the yen, placing pressure on cryptocurrencies like Bitcoin and Ethereum sensitive to interest rate changes.

Japan's central bank is deliberating an increase in interest rates to 0.75%. This decision follows economic improvements and diminishing U.S. trade tensions. Market participants anticipate the outcome of the meeting to influence global trends. "The bank is weighing a potential December hike, noting fading U.S. tariff risks and improving economic projections," said Governor Kazuo Ueda.

Internal Debates at the Bank of Japan

Led by Governor Kazuo Ueda, the Bank of Japan is contemplating this move amidst internal debates. Board members Tamura and Takata have pushed for tighter monetary policies due to ongoing inflationary pressures. Further deliberation is scheduled for December.

Global Economic Considerations

Economists predict possible shifts in global risk assets if the yen strengthens. The Bank of Japan's recent trend towards normalizing interest rates aligns with historical precedents from the 1990s, creating a cautious optimism among financial analysts. The proposed rate increase underscores Japan's focus on economic stability. Historical analysis suggests that similar actions previously influenced global markets significantly. The ongoing monetary discussions highlight the importance of strategic financial planning.

Source: CryptoSlate

Risk Warnings and Disclaimers

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Olivia Brooks

Economic

The Japanese government has compiled a record fiscal 2026 draft budget totaling more than 120 trillion yen ($770 billion), reflecting Prime Minister Sanae Takaichi's push for aggressive fiscal spending as well as the need to please opposition parties.

The budget proposal, set to be approved by the cabinet Dec. 26 for submission to parliament, exceeds the fiscal 2025 budget totaling 115 trillion yen and is raising alarms in the market over a rising debt load.

This comes after the fiscal 2025 supplementary budget enacted by parliament Tuesday, the largest since the COVID-19 pandemic. Takaichi ordered an increase in that budget, from the 14 trillion yen in general-account spending proposed by the Finance Ministry up to 17.7 trillion yen.

In a Nov. 27 meeting of the Council on Economic and Fiscal Policy, the prime minister questioned Japan's use of supplementary budgets in recent years to adjust spending levels.

"I think it's very much necessary to properly allocate the needed funding in the initial budget," she said.

The total fiscal 2026 budget request made in the summer, under Takaichi's predecessor Shigeru Ishiba, came to a record 122.4 trillion yen. The proposed budget drafted later in the year was adjusted based on economic conditions and Finance Ministry assessments, and also was changed to reflect the new government's policy priorities.

Takaichi has made "crisis management" investments a centerpiece of her growth strategy, naming 17 priority areas requiring heavy spending including artificial intelligence, semiconductors, shipbuilding and quantum computing.

Funding also is needed to make school lunches free -- a policy agreed on in the coalition agreement between Takaichi's Liberal Democratic Party and the Japan Innovation Party -- and to scrap a tax surcharge on gasoline. Defense spending needs to be increased as well, as Japan aims to reach its target of 2% of gross domestic product.

The budget, which would take effect in April, also illustrates the ruling parties' tenuous hold on power. The LDP-Japan Innovation coalition holds a bare majority in the lower house but lacks a majority in the upper house, meaning cooperation with opposition parties remains necessary to pass the bill.

As such, some budget revisions reflect demands from other parties. These include roughly 100 billion yen for tuition-free high school and 5.5 billion yen to rework high-cost medical fees, requested by Japan Innovation and the opposition Constitutional Democratic Party, respectively. Demands by the opposition Democratic Party for the People and former LDP coalition partner Komeito added another 900 billion yen.

Some in the government call for reining in spending, arguing that the budget should not exceed the originally requested sum of 122.4 trillion yen.

The yield on 10-year Japanese government bonds is nearing 2%, and the Bank of Japan is expected to raise interest rates at its policy board meeting concluding Friday.

A minister with an economy-related portfolio expressed approval of a rate hike, saying "when the market has priced it in to this extent, they'd be held responsible if they did the opposite."

Increased government spending amid rising interest rates risks stoking anxiety in the markets. Higher interest rates not only increase the government's debt repayment burden, but also affect consumers through higher mortgage rates.

Takaichi has been speaking more frequently about taking fiscal risks into account. In a news conference Wednesday, she stressed that her government's fiscal policy is "absolutely not focused on scale," adding that it will "properly consider sustainability" through "balanced, strategic fiscal spending."

The government is on track to issue less debt in fiscal 2025 than fiscal 2024, though this owes largely to Ishiba's government curbing bond issuance for the initial budget. Over 60% of the cost of the new supplementary budget will be funded with bonds.

Source: Asia_Nikkei

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Blue River

Forex

Economic

The dollar lost ground against the Japanese yen and Swiss franc on Thursday after data showed a lower-than-expected rise in U.S. inflation, while the euro eased after the European Central Bank held interest rates steady.

The U.S. Consumer Price Index rose 2.7% year-on-year in November, according to Labor Department data, compared with a 3.1% increase forecast by economists polled by Reuters.The dollar weakened 0.12% to 155.50 against the Japanese yen and was down 0.14% to 0.79405 against the Swiss franc .

"The margin of error shouldn't be this great and it is questionable whether what we got in this release is going to make its way into the more traditional data collection discussion," said Marvin Loh, senior global market strategist at State Street in Boston.

"One of the things that ends up being a challenge in terms of changing expectations significantly is that we're already pricing in a Fed that gets to neutral within the next 12 months. So you either need to aggressively push against the neutral and/or start believing that there's a recession that will make you go below neutral and I don't think we're anywhere near there," Loh said.

The longest federal government shutdown in U.S. history had impacted data collection for the inflation report. The Federal Reserve tracks the Personal Consumption Expenditures Price Index for its 2% inflation target.

President Donald Trump said on Wednesday the next Fed chair will be someone who believes in lower interest rates "by a lot".All of the known candidates - White House economic adviser Kevin Hassett, former Fed Governor Kevin Warsh and current Fed Governor Chris Waller - advocate for interest rates to be lower than they are now.

Central Bank Moves

The euro edged lower in choppy trading after the European Central Bank kept its policy rates steady and took a more positive view on a euro zone economy that has shown resilience to global trade shocks.

The euro was last down 0.14% at $1.17240 against the dollar.

"Today's meeting offered no new information to change our view on the most likely policy path or the surrounding risk balance," Barclays analysts led by Mariano Cena said in an investor note. "We continue to expect the ECB to remain on hold for the next two years and see the risk tilted towards lower, not higher, policy rates over our forecast horizon."

The dollar index , which measures the greenback against a basket of currencies including the yen and the euro, edged up 0.06% to 98.435.

Sterling rose after the BoE delivered its fourth rate cut this year, although markets pushed back their expectations for further easing, with the next cut not fully priced until June, from April prior to the decision.

Sterling strengthened 0.09% to $1.33846.

"Interest rate markets have reduced their bets on further easing, likely on account of both the finely balanced nature of upcoming decisions and the Governor's comment that room for further reductions is becoming more limited. Two-year sterling swap rates are roughly five basis points higher," said Tom Priscott, FX trader at Investec.

"The pound may have further room for upside as traders recalibrate their outlooks for 2026 through the afternoon," Priscott said.

The Swedish and Norwegian central banks both kept their main interest rates on hold, in line with expectations. The Swedish crown was last down 0.29% at 10.8855 per euro, while Norway's crown was last down 0.52% at 11.9173 per euro.

The Bank of Japan looks almost certain, opens new tab to raise short-term interest rates on Friday to 0.75% from 0.5% as high food costs keep inflation above the central bank's 2% target.

Source: Kitco

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Manuel

Cryptocurrency

Stocks

Search engine giant Google has emerged as a silent architect behind Bitcoin miners' rapid pivot towards artificial intelligence (AI).

Instead of acquiring mining firms, the Alphabet-owned company has provided at least $5 billion of disclosed credit support behind a handful of BTC miners' AI projects.

While markets often frame these announcements as technology partnerships, the underlying structure is closer to credit engineering.

Google’s backing helps recast these previously unrated mining companies as counterparties that lenders can treat like infrastructure sponsors rather than pure commodity producers.

The mechanism for these deals is pretty straightforward.

BTC Miners contribute energized land, high-voltage interconnects, and shell buildings. Fluidstack, a data-center operator, signs multi-year colocation leases with these firms for the “critical IT load,” the power delivered to AI servers.

Google then stands behind Fluidstack’s lease obligations, giving risk-averse commercial banks room to underwrite the projects as infrastructure debt instead of speculative crypto financing.

The Google backstops

TeraWulf established the structural precedent at its Lake Mariner campus in New York.

Following an initial phase, the miner announced a massive expansion, lifting the total contracted capacity above 360 megawatts. TeraWulf values the deal at $6.7 billion in contracted revenue, potentially reaching $16 billion with extensions.

Crucially, the deal terms indicate Google increased its backstop to $3.2 billion and boosted its warrant-derived stake to approximately 14%.

Notably, Google's role was also evident in Cipher Mining's AI pivot.

Cipher Mining had secured a 10-year, 168-megawatt AI hosting agreement with Fluidstack at its Barber Creek site.

While Cipher markets this as approximately $3 billion in contracted revenue, the financial engine is Google’s agreement to backstop $1.4 billion of the lease obligations.

In exchange for this credit wrap, Google received warrants convertible into roughly a 5.4% equity stake in Cipher.

Hut 8 Corp. further scaled the model on Dec. 17, disclosing a 15-year lease with Fluidstack for 245 megawatts of IT capacity at its River Bend campus in Louisiana.

The contract holds a total value of $7 billion. Market sources and company disclosures confirm that JP Morgan and Goldman Sachs are structuring the project finance, a feat made possible only because Google “financially backs” the lease obligations.

Why AI leases beat bitcoin margins

These miners' structural pivot responds to deteriorating mining economics.

CoinShares’ data puts the average cash cost to produce 1 BTC among listed miners at about $74,600, with the total cost including non-cash items such as depreciation closer to $137,800.

With BTC trading around $90,000, margins for pure-play miners remain compressed, prompting boards to seek more stable revenue streams.

That search now points to AI and high-performance computing. CoinShares reported that public miners have announced more than $43 billion in AI and HPC contracts over the past year.

Through these deals, BTC miners have a better standing with financial institutions because banks can underwrite a 10 or 15-year AI capacity lease as recurring revenue and test it against debt service coverage ratios.

Bitcoin mining income, by contrast, moves with network difficulty and block rewards, a pattern most institutional lenders are reluctant to anchor on.

However, Google’s role bridges this gap. As a credit enhancer, it lowers the perceived risk of projects and enables miners to access capital closer to that of traditional data center developers.

For Google, the structure improves capital efficiency. Instead of carrying the full cost of building data-center shells or waiting through interconnection queues, it secures future access to compute-ready power through Fluidstack. It also retains upside optionality through equity warrants in the miners.

Operational risks and counterparty chains

Despite the financial logic, the operational execution carries distinct risks.

Bitcoin miners have traditionally optimized for the cheapest, most easily curtailed power they can secure. AI customers, by contrast, expect data-center grade conditions, including tight environmental controls and rigorous service-level agreements.

So, the transition from “best-effort” mining to near-continuous reliability requires an overhaul of both operational culture and physical infrastructure. If cooling retrofits run over budget or interconnect upgrades face delays, miners will confront breaches of contract rather than simple opportunity costs.

Furthermore, the structure introduces significant counterparty concentration.

The economic chain relies on Fluidstack acting as the intermediary. Cash flows depend on Fluidstack’s ability to retain AI tenants and, ultimately, on Google’s willingness to honor the backstop for over a decade.

If the AI hype cycle cools or tenants force lease renegotiations, this chain creates a single point of failure. Miners are effectively betting that Google will remain the ultimate backstop, but legal recourse flows through the middleman.

Risks

The broader implications of these deals reach beyond project finance into competition policy and Bitcoin’s long-term security budget.

By relying on credit backstops rather than direct acquisitions, Google can aggregate access to energized land and power, the scarcest inputs in the AI build-out. This approach avoids the kind of merger review that a large asset purchase would invite.

However, if this template scales across multiple campuses, critics could argue that Google has created a kind of “virtual utility.” It would not own the buildings but would still shape who can deploy large-scale computing on those grids.

As a result, regulators may eventually find themselves asking whether control over long-dated AI capacity, even via leases, deserves closer antitrust scrutiny.

For Bitcoin, the trade-off is straightforward. Every megawatt diverted from mining to AI reduces the pool of power available to secure the network.

The market once assumed that hashrate would track price almost linearly as more efficient rigs and more capital came online.

So, if the most efficient operators systematically redeploy their best sites into AI contracts, hashrate growth becomes more constrained and more expensive, leaving a greater share of block production to stranded or lower-quality power assets.

Source: Cryptoslate

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Manuel

Central Bank

Forex

Federal Reserve Bank of Chicago President Austan Goolsbee said on Thursday “there’s a lot to like” in the latest consumer price index data, and if it can be sustained, it will help open the door for ‌more interest rate cuts next year.

“My view is that the settling point of rates is a fair bit below ‌where it is today, and that by the end of next year we can, as long as we are hitting our marks on getting inflation back on path to 2%, I think that it's realistic that rates can come down a fair amount,” Goolsbee said in a Fox Business interview. ⁠Goolsbee was one of two officials ‌who voted against the central bank’s rate cut last week.

Goolsbee called data that showed some moderation in price pressures in November as measured by the ‍CPI a “good month,” while cautioning not to make too much of a single month’s findings.

The report, its release delayed by the government shutdown, showed a moderation in price pressures. But economists viewed the report cautiously given issues with its compilation, and the favorable turn was not seen as an all-clear ‌that price pressures, which have been well above the Fed’s 2% target, are abating on a sustainable basis.

The Fed cut its interest rate target by a quarter percentage point to between 3.5% and 3.75% on December 10, as it balanced rising risks to the job market with the fact that inflation remains too high. Goolsbee voted against the rate cut along with one other ⁠regional Fed leader, while one official voted in favor of a half percentage point easing.

In a statement last Friday, Goolsbee said “I believe we should have waited to get more data, especially about inflation, before lowering rates further.” He added, “waiting to take this matter up ‍in the new year would ⁠not have entailed much additional risk and would have come with the added benefit of updated economic data which have been absent lately.”

In the interview on Thursday, Goolsbee said, “I ⁠just am uncomfortable front loading the rate cuts” before there’s strong confidence inflation will be returned to target. Before ‌easing again, “we are going to want to see progress” on lowering price pressures.

Source: Reuters

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Manuel

Stocks

Economic

Wall Street's main indexes closed higher on Thursday as a soft inflation report fed expectations for interest rate cuts by the Federal Reserve, while chipmaker Micron's blowout forecast signaled strong AI demand.

The Consumer Price Index report showed that consumer prices increased less than expected in the year to November. The Labor Department's Bureau of Labor Statistics did not publish month-to-month CPI changes after the 43-day shutdown of the government prevented the collection of October data.

"The constructive CPI report ... starts to ease pressure on policymakers further to potentially get more comfortable cutting rates next year," said Bill Merz, head of capital markets research at U.S. Bank’s Asset Management Group. "We’ll want to see follow-through next month to ensure there wasn’t too much noise from the shutdown."

The three major indexes rebounded from three-week lows, and the Russell 2000 index (.RUT), tracking rate-sensitive smallcaps, also advanced 0.8%.

A jobless claims report showed new applications fell last week, reversing the prior week's surge and suggesting labor market conditions remained stable in December. Earlier this week, an official jobs report showed U.S. job growth rebounded in November and the unemployment rate rose to 4.6%.

Traders now see a 58% chance for a dovish policy move by the Fed in March, according to CME's FedWatch Tool.

The Dow Jones Industrial Average (.DJI) rose 65.88 points, or 0.14%, to 47,951.85, the S&P 500 (.SPX) gained 53.33 points, or 0.79%, to 6,774.76 and the Nasdaq Composite (.IXIC) gained 313.04 points, or 1.38%, to 23,006.36.

Six of the 11 S&P sectors gained, led by consumer discretionary (.SPLRCD) stocks, which rose 1.78%.

Lululemon (LULU.O) surged 3.5% on a report that activist investor Elliott has acquired more than a $1 billion stake in the athletic-wear company. Starbucks (SBUX.O) also rallied 4.9%.

Among tech stocks, Micron Technology (MU.O) jumped 10.2% after the company forecast quarterly profit at nearly double what analysts were expecting on strong artificial intelligence-related demand.

Other memory companies including SanDisk (SNDK.O) and Western Digital (WDC.O) also surged, while the Philadelphia SE Semiconductor Index (.SOX) climbed 2.6%.

Companies' massive debt-backed spending on developing AI technology and uncertainty about how they plan to monetize it have plagued risk-taking this quarter.

Oracle (ORCL.N) rose 0.9%, recovering from a fall on Wednesday when funding plans for a Stargate data center sparked a broad equities selloff.

Trump Media & Technology (DJT.O) jumped 41% after the company and fusion power company TAE Technologies said they have agreed to combine in an all-stock deal valued at more than $6 billion.

Advancing issues outnumbered decliners by a 1.9-to-1 ratio on the NYSE. There were 216 new highs and 105 new lows on the NYSE. On the Nasdaq, 2,892 stocks rose and 1,773 fell as advancing issues outnumbered decliners by a 1.63-to-1 ratio.

The S&P 500 posted 15 new 52-week highs and no new lows while the Nasdaq Composite recorded 112 new highs and 178 new lows.

Volume on U.S. exchanges was 16.89 billion shares, compared with the 16.96 billion average for the full session over the last 20 trading days.

Source: Reuters

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Manuel

Political

Commodity

Oil edged higher for a second day as geopolitical risks in Venezuela and Russia offered support to prices that have been weighed down by a bearish oversupply outlook.

West Texas Intermediate rose 0.4% to settle above $56 on Thursday, a day before the January contract expires. The more-active February contract exhibited similar gains.

The prospect of US military action in oil-rich Venezuela, which currently accounts for less than 1% of world crude output, has boosted supply concerns. President Donald Trump this week ordered a blockade of sanctioned oil tankers docking in the Latin American country but refrained from outlining his next moves during a televised address.

The US is also preparing a fresh round of sanctions on Russia’s energy sector over its war in Ukraine even as the US and Kyiv’s European allies have considered security guarantees to ensure any peace deal would hold.

“If no peace deal is reached, the attacks on Russia could escalate, quickly tightening supplies,” said Dennis Kissler, senior vice president for trading at BOK Financial Securities Inc. “If you add in the blockade on Venezuelan oil, crude prices may very well be a bit underpriced here.” Oil Holds Gains With Support From Tensions in Venezuela, Russia_1

Oil Holds Gains With Support From Tensions in Venezuela, Russia_1

Oil is still on track for the worst annual loss since 2018 as global supplies eclipse demand. Benchmark US crude futures dipped to a four year low in recent days before the spike in tensions pushed prices higher. Market metrics from the Middle East to the US have been flashing signs of underlying weakness.

In Venezuela, oil-storage facilities and tankers at terminals are quickly filling up, according to people familiar with the situation. If those facilities reach maximum capacity, state-owned Petróleos de Venezuela SA could be forced to shut in wells. Meanwhile, oil companies are telling the White House that they are uninterested in returning to Venezuela in the event that President Nicolás Maduro leaves, POLITICO reported.

If oil does make any sharp moves in the coming week, it will come as activity has thinned in the run-up to next week’s Christmas break. That could amplify price moves, lifting volatility.

Meanwhile, heating oil futures declined. On the US East Coast, where the distillate pool is burned in furnaces, weekly diesel output reached its highest since September 2019.