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      Bank of Japan Expected to Raise Interest Rates in December 2026

      Daiwa Securities has projected that the Bank of Japan (BOJ) will implement its next interest rate hike in December 2026, followed by another increase in April 2027. This forecast follows the BOJ's recent decision to raise its policy rate to 1.25% in September 2026, marking a significant shift in the central bank's monetary policy approach, as stated by economist Kenji Yamamoto.

      Governor Kazuo Ueda indicated that the BOJ's focus has transitioned from merely raising inflation to maintaining it at a stable 2%. This change reflects a new phase in policy, where the central bank will now weigh both upside and downside risks to inflation equally. Factors such as rising oil prices, strong wage growth, and companies passing on costs to consumers are contributing to this cautious stance on inflation management.

      Yamamoto noted that the BOJ's upcoming October Outlook Report may include upgrades to its inflation forecasts, particularly if oil prices remain elevated. While Ueda did not rule out the possibility of consecutive rate hikes or a larger increase of 50 basis points, Daiwa anticipates a more measured approach with quarterly hikes being the norm. The BOJ's recent tightening of a climate-related lending facility further indicates a broader normalization of its monetary policy beyond just interest rates.

      © 2026 KLEA News. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

      Source: KLEA News

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