BOJ Hikes Rate to 1.25%, Bringing Mixed Bag for Japanese Households
The Bank of Japan (BOJ) has raised its policy rate to 1.25% in September 2026, as part of a series of interest rate hikes aimed at countering rising inflation fueled by Middle East tensions and a weak yen.
The sixth rate increase since March 2024 is expected to bring positive effects for Japanese households, but the impact varies sharply across age groups. Younger generations carry larger mortgage balances and are likely to face growing mortgage burdens due to higher interest payments, with annual increases of ¥22,000 for those in their twenties or younger and ¥23,000 for those in their thirties.
In contrast, older generations holding financial assets such as savings will see higher interest income, with projected annual net gains around ¥20,000 for those in their sixties and ¥21,000 for those 70 and older. The BOJ is expected to continue exploring further rate hikes, with Hattori Naoki, chief Japan economist at Mizuho Research and Technologies, anticipating another rate hike to 1.5% in December and possibly reaching 2.0% by June 2027.