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2026-11-02 13:46:26
[Kazuo Ueda Releases Hawkish Signals: Bank of Japan Raises Rates to 1.5% in December, Room for Further Tightening Next Year Remains Unclear] (1) Bank of Japan Governor Kazuo Ueda released hawkish signals, making a December rate hike to 1.5% almost certain, but the room for further monetary policy tightening next year remains unclear. The Bank of Japan estimates the nominal neutral interest rate range to be 1.1% to 2.5%, but this rate cannot be directly observed, making it difficult for policymakers to determine the end of the rate hike. (2) Japanese inflation has been consistently above the 2% target, and corporate spending remains strong, prompting the central bank to accelerate policy normalization; however, prolonged deflation and ultra-low interest rate environments may make households and businesses more sensitive to rising financing costs. (3) There are disagreements within the Bank of Japan regarding the pace of rate hikes, with some hawkish members advocating for faster rate increases. Nomura Securities predicts that the Bank of Japan may raise interest rates to 1.75% around March next year, and then pause rate hikes, but the final path has not yet been determined.
