Japan producer prices rise 7.1%, keeping a December rate rise in play

The figure

Japan's producer price inflation rose 7.1% year on year, the Bank of Japan reported on 12 November. Economists had expected 6.5%, and the reading accelerated from 6.8% the previous time.

The data raise expectations for another increase in the Bank of Japan's benchmark interest rate, which would be the third of 2026. Markets price a 25 basis point rise that would take the rate to 1.50%, according to Criptovaluta.it.

The yen barely moves

The yen did not gain noticeably on the higher probability of a December rate rise. USD/JPY stood at 159.69 when the report was published, after the pair came close to 160, according to the same report. The yen had gained 1.29% over five days, and the limited reaction suggests the market had expected a strong number.

Overnight index swap trading implies an 82% probability of a rate increase, Criptovaluta.it reported. Beyond the decision itself, the central bank's press conference after the December meeting will matter for signals on future policy.

Why crypto traders watch it

Higher Japanese rates change the yield gap between Tokyo and Washington that underpins the yen carry trade, borrowing in yen to invest in higher-yielding assets. Jefferies estimates that all cross-border yen lending amounts to 2,340 billion, a figure that covers the whole market rather than the carry trade alone.

A faster pace of tightening in Japan than in the United States would revive a discussion that has not returned to the centre of attention, the report said. That could change if Federal Open Market Committee members move away from their hawkish stance, as their recent public comments suggested.

Background

Central bank gold buying has exceeded expectations in 2026, and gold ETFs have reached new records, the report noted. Gold was down over the week.