BOJ Rate Hike Predicted by Takaichi's Adviser in September

Takuji Aida, an economic adviser to Japanese Prime Minister Sanae Takaichi, has projected that the Bank of Japan (BOJ) will raise interest rates in September. This forecast is significant as Aida is a reflationist and one of the most vocal opponents of BOJ rate hikes.

Aida stated that he was pushing forward his previous forecast of the next increase from January 2027, citing the narrow window of opportunity for a hike before an extraordinary session of Parliament convenes in early October. According to Aida, after the September rate hike, the BOJ will likely follow up with another increase by January 2027, and then revert to a hike once every six months.

The remarks by Aida suggest that there is broadening consensus within Takaichi's administration of the need for further BOJ rate hikes to combat unwelcome yen falls. The markets have nearly fully priced in the chance of a September rate hike, with some expecting a 25 basis points increase to 1.25 per cent at the next policy meeting on September 17 and 18.