BOJ Set for Double Rate Hike by Year-End

Former Bank of Japan (BOJ) board member Seiji Adachi predicts that the BOJ will raise its benchmark interest rate next month and again in January, taking it beyond the current 1.25% level.

Markets are already pricing in a high likelihood of a September hike, with traders assigning an around 80% probability to a decision to increase rates on September 18.

Adachi warns that a hold would risk rekindling a yen selloff and potentially driving inflation higher due to costly imports.

The BOJ's policy rate may ultimately need to rise to around 2.75%, according to Adachi's estimate using the Taylor rule, which is significantly higher than the median economist forecast of around 1.5% by the end of next year.