BOJ Policy Rate Peak Unlikely to Reach 2%, SMBC Nikko Says
Dow Jones
Aug 21
0512 GMT - The Bank of Japan is likely to raise its policy rate to 1.25% from the current 1% at its next meeting in September, SMBC Nikko Securities economists say. The bank is then expected to make additional hikes in January and June 2027 to reach a terminal rate of 1.75%, they note. "It is unlikely that the central bank will raise its policy rate to 2%--above average estimates of the neutral rate--after next summer, when import-driven inflationary pressures are expected to wane," they add. The overnight index swap market is currently pricing in an 84% chance of a BOJ rate hike in September and two rate increases by early 2027.
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