BOJ still likely to raise interest rates further with target of 1.50%, says ex-policymaker

An ex-policymaker, Sakurai, suggests the Bank of Japan (BOJ) is likely to raise interest rates further towards 1.50%. The next rate hike may occur around June or July next year, dependent on the strength of the economy, along with wage and price developments. After the initial increase, further hikes might become challenging as they bring borrowing costs closer to an unspecified neutral rate, estimated at around 1.75%. The BOJ could implement two hikes in the upcoming fiscal year if the US economy remains strong and domestic inflation persists above the BOJ's 2% target. However, if economic uncertainty rises, the BOJ may opt to raise rates just once in the next fiscal year and delay further increases until 2027. Concerns about potential backlash from Prime Minister Takaichi also influence the BOJ's messaging and decision-making process in the future.