In today’s technology-driven financial world, even seemingly small decisions can alter the market’s trajectory. At FinancialMediaGuide, we are closely watching the latest development: former Bank of Japan board member Makoto Sakurai believes the BOJ will raise its key interest rate to 1.5% at least four more times before Governor Ueda’s term ends. We see this statement as a critical signal, carrying implications not only for Japan’s domestic economy but also for global markets.
Sakurai predicts that the first hike could come as early as October or December this year, followed by two more increases in fiscal 2026 and another one or two by March 2028. He argues that Japan’s economy is currently in solid shape, with large corporations enjoying robust profits driven by inflation and a weaker yen, while exports benefit from the favorable currency environment. “The BOJ is likely to steadily raise rates and normalize monetary policy,” our analysts at FinancialMediaGuide emphasize, noting that gradual tightening appears to be the most logical and balanced course under the current conditions.
It is worth recalling that in January the BOJ raised its benchmark rate to 0.5% and has since held it steady to assess the impact of U.S. tariffs on the Japanese economy. According to Sakurai, the next move could come this autumn, especially after the release of the quarterly tankan business survey, which will show whether corporate sentiment and profits remain resilient. If the results are strong, they could provide the central bank with the justification needed for an October hike.
Still, Sakurai notes that the BOJ lacks sufficient hard data to fully evaluate the effect of U.S. tariffs amid broader global uncertainty. Interestingly, two of the nine board members recently dissented from the decision to keep rates unchanged — a move that, in Sakurai’s view, may have been a subtle signal to markets that a hike is approaching.
Surveys show that most economists expect a 25-basis-point hike before year-end, though some push that projection to January. External pressures are also mounting: the U.S. has criticized Japan for being slow to respond to inflation. A joint U.S.-Japan statement affirming “market-determined” exchange rates, according to Sakurai, was a warning to Tokyo not to intervene in the currency markets to curb yen strength. “With the Fed cutting rates while the BOJ eyes hikes, yen appreciation becomes a natural trend,” our analysts highlight.
At FinancialMediaGuide, we believe the BOJ is likely to adopt a cautious but consistent approach to tightening. The first move could come in October, but much will depend on the tankan results and signals from board members. For global investors, this represents a crucial test: can Tokyo manage the balance between higher rates and economic stability? In our view, this could become a defining moment, setting the tone not only for Asian markets but also shaping the broader global investment landscape for years ahead.
