BOJ Aims for 2% Rate by June 2027 Amid Inflation Risks

Former BOJ board member Makoto Sakurai predicts that the Bank of Japan could raise interest rates to 2% by June 2027 as it seeks to combat inflationary pressures.

The central bank has already raised its benchmark interest rate to 1.25% in September, its highest level in 31 years, in a shift away from its ultra-loose monetary policy.

Sakurai believes the BOJ is increasingly focused on preventing price pressures from becoming entrenched, particularly with higher fuel costs, a weak yen, and strong demand linked to artificial intelligence adding to inflation risks.

The former board member expects Japanese consumer prices could rise more than 3% by the end of this year and into early 2027 as higher energy costs feed through to households.