BofA Sees Bank of Japan Lifting Rate to 2% After Three More Hikes
BofA Securities expects three more Bank of Japan rate hikes, in December 2026 and March and July 2027, taking the policy rate to 2%, per Market Talk.
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what happened
According to BofA Securities' baseline scenario, reported by Market Talk, the Bank of Japan could raise its policy rate in December 2026, then again in March and July 2027, reaching 2%. As the rate nears that level, BofA expects more board debate over the delayed effect of tighter policy on financial conditions. Higher borrowing costs could also bring renewed pressure from the government. Yet postponed hikes may weaken the yen and add to inflation, which BofA says could raise the risk of a terminal rate above its baseline.
why it matters
The pace of tightening is the key variable for markets. A slower path toward a 2% rate supports low yen yields and could weaken the currency, which matters for USD/JPY and Japanese government bonds. This is one bank's baseline forecast, not a central bank decision.
market impact
Yen and JGBs: a slower tightening path weighs on the yen and supports USD/JPY
tags
instruments
sources
- BOJ Likely to Hike Three More Times, Taking Policy Rate to 2% — Market Talk, 23 October 2026 at 04:22 UTC
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