BOJ Rate Hike Predicted by Takaichi's Adviser, Market Already Pricing in September Increase

A senior economic adviser to Japanese Prime Minister Sanae Takaichi has predicted that the Bank of Japan will raise interest rates in September, followed by further hikes at a pace of once every quarter until January next year.

Takuji Aida, chief Japan economist at Credit Agricole and a reflationist, made this forecast on Monday. He cited the upcoming extraordinary session of parliament as a reason for the predicted rate hike in September.

Aida's remarks suggest that there is growing consensus within Takaichi's administration about the need for further Bank of Japan rate hikes to combat yen weakness.

The market has already largely priced in a 25 basis point increase in the policy rate to 1.25% at the next BOJ meeting on September 17 and 18.