An economic adviser to Japanese Prime Minister Sanae Takaichi is projecting that the Bank of Japan will raise its policy interest rate at its September 17-18 meeting, bringing it to 1.25 percent. Takuji Aida, chief Japan economist at Crédit Agricole, also forecasts quarterly rate increases through January 2027, followed by semiannual adjustments thereafter. The current BOJ policy rate stands at 1 percent, and a 25 basis point increase is already largely priced into markets. US Treasury Secretary Scott Bessent has called for decisive BOJ action to stabilize the yen, adding international pressure on Tokyo to act. Japan’s parliament is also set to discuss suspending an 8 percent levy on food items for two years in October, which would partially offset the tightening effect of higher rates on consumers.
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