The Bank of Japan (BOJ) is preparing for a significant monetary policy shift that could affect every foreign resident's finances in Japan. Beginning December 18, the central bank's policy board will convene to make a final decision on raising interest rates, potentially bringing the policy rate to 0.75%—a level not seen in three decades, according to NHK. This anticipated move comes as Japan's economic landscape shows signs of sustained wage growth expected to continue into the next fiscal year. The BOJ's deliberations reflect confidence that the country's deflationary period may finally be ending, with robust salary increases supporting higher borrowing costs. Market reactions have already begun. On December 17, long-term interest rates surged dramatically, with 10-year Japanese government bond yields reaching 1.98%—the highest level in 18 and a half years, last seen in June 2007, NHK reported. This spike reflects investor expectations that the BOJ will proceed with gradual rate increases in the coming months. For expats living in Japan, these developments carry important practical implications. Higher interest rates typically mean better returns on savings accounts and time deposits, which could benefit those holding yen-denominated savings. After years of near-zero interest rates that made Japanese bank accounts essentially unprofitable, savers may finally see meaningful returns on their deposits. However, the flip side affects borrowers. Anyone with a variable-rate mortgage or considering taking out a housing loan should prepare for higher monthly payments. The 0.75% rate, while still low by international standards, represents a substantial increase from the near-zero rates Japan has maintained for years. Those planning major purchases requiring financing should carefully evaluate whether to lock in current rates or wait. The currency markets also responded to rate expectations, with the yen weakening against the dollar on December 17 as traders adjusted their positions. For expats sending money overseas or receiving income in foreign currencies, exchange rate volatility may continue as markets digest the BOJ's policy changes. Interestingly, Japanese households are growing wealthier overall. Personal financial assets reached a record high of 2,286 trillion yen as of September 2025, representing a 4% increase year-over-year, according to BOJ data reported by NHK. This growth stems largely from rising stock prices and increased investment trust holdings, suggesting more Japanese residents are moving beyond traditional savings accounts into higher-yield investments. The Tokyo stock market showed cautious trading on December 17, with the Nikkei average experiencing minimal movement as investors awaited the policy meeting. This hesitancy reflects uncertainty about how corporate earnings and economic growth will respond to tighter monetary conditions. For foreign residents, particularly those paid in yen, the broader economic context matters. The anticipated wage growth supporting the BOJ's rate decision could translate into better salary negotiations and compensation packages. Companies facing labor shortages may offer more competitive pay to attract and retain talent, including international workers. Expats should also monitor how rate changes affect everyday expenses. While higher rates can strengthen the yen and potentially reduce import costs, they may also slow economic activity and affect employment conditions in certain sectors. Financial planning becomes more critical in this changing environment. Foreign residents should review their banking arrangements, consider whether fixed-rate products make sense for loans, and evaluate whether their savings strategies align with the new interest rate reality. Consulting with financial advisors familiar with both Japanese regulations and international tax implications can help optimize personal finance decisions. As Japan transitions away from its long-standing ultra-loose monetary policy, expats should stay informed about BOJ announcements and their ripple effects across housing, employment, and personal finance. The December 18-19 policy meeting will provide crucial clarity on the timeline and magnitude of future rate adjustments.