The Bank of Japan could raise interest rates as soon as October, according to former board member Makoto Sakurai, adding weight to growing market expectations of near-term tightening. “The BOJ may act in October,” he said, noting the decision will hinge on how certain policymakers want to be about the tariff impact, which may not fully show up in economic data until later in the year. Info via Bloomberg (gated).
Markets are increasingly betting on a hike by year-end after reports that BOJ officials see room for another increase in 2025. Speculation intensified following the Sept. 19 meeting, where two board members dissented against holding rates — the first such split under Governor Ueda. Sakurai suggested the dissent might have been a coordinated signal of change rather than purely about inflation, which has been above target for more than three years.
He also flagged politics as a wildcard, with the Oct. 4 Liberal Democratic Party leadership contest possibly delaying action if leading contender Sanae Takaichi — once a vocal opponent of tightening, though recently more muted — secures victory.
Looking longer term, Sakurai expects the BOJ to raise its policy rate by up to 100bps over the next two and a half years, bringing it to around 1.5% by the end of Governor Ueda’s term in 2028. That’s slightly above the market consensus for a 1.25% peak, though he says reaching that level looks certain.
Earlier:
After a huge slide overnight JPY is gaining back some strength today. This sort of opinion from BOJ and ex-BOJ members is yen supportive.
