Good morning everyone. Last night, Zhong Ling mentioned that the outcome of the current market depends entirely on the speech given by Governor Ueda and Onda at the press conference this afternoon at 14:30. So today, I want to talk to you about the key signals we should watch for that will determine the outcome!

On the afternoon of December 19, the Bank of Japan will announce its largest interest rate hike in 17 years. The policy rate will be raised from about 0.5% to around 0.75%. If true, this will be the highest level since September 1995 and the second rate hike this year. Here are the points we need to pay attention to:

First, subtle changes in wording: especially note whether the descriptions of “yen” and “inflation” are more hawkish than before. The wording regarding yen depreciation will be the first hot spot. If the statement explicitly links “excessive yen volatility” with “policy considerations” for the first time, it will be a strong hawkish signal.

Second, economic and inflation forecasts: The Bank of Japan will also release the latest quarterly “Economic and Price Outlook Report” today. Focus on whether they significantly revise upward the core CPI forecasts for 2025 or 2026.

Third, voting ratio: Was Governor Ueda’s rate hike decision unanimously approved or were there dissenting votes? Unanimous approval indicates internal unity, which makes the policy signal more powerful. A divided central bank may cause market doubts about future policy consistency.

The signals will soon be revealed. Remember, major policy milestones often come with intense volatility. Zhong Ling wants to remind you that what matters is not predicting the absolute direction, but adjusting your positions based on real-time information. Buckle up this afternoon!

(Zhong Ling’s personal opinion, for reference only)