BOJ Interest Rate Hikes to Continue Through 2027: Daiwa Securities

Daiwa Securities economist Kenji Yamamoto expects the Bank of Japan to raise interest rates again in December, followed by another hike in April 2027. He argues that the central bank's September move marked a genuine turning point in how it runs policy.

The BOJ lifted its policy rate to 1.25% this month, and Yamamoto expects it to keep tightening at roughly one hike per quarter towards a peak of around 2%. The key shift, he says, is in the BOJ's objective, as Governor Kazuo Ueda stated that 'the policy phase had changed'.

The central bank's goal has shifted from quantitative easing to monetary policy normalization. With underlying inflation now close to 2%, the task is to control inflation without stifling growth.