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January 23, 2026
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Hawkish BOJ Outlook Signals Rate Hikes

  • BOJ held rates at 0.75% as expected, but a hawkish outlook and upgraded core inflation reinforce expectations of further hikes in 2026.
  • An 8–1 vote, with one member preferring a hike to 1%, and persistent wage-driven inflation, suggests structural pressures that argue for a higher terminal rate.
  • With labour tightness and rising inflation expectations, markets now price additional hikes, making the timing and pace of BOJ normalisation the key policy focus.
December 19, 2025
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BOJ: Measured Steps Toward Normalisation

  • A hike to 0.75% was delivered as expected, reflecting confidence in wage-led inflation momentum, though real rates remain deeply negative and uncertainty around trade policy and wage sustainability persists.
  • Future tightening hinges critically on 2026 spring wage negotiations reaching 5%+ and underlying inflation remaining firm as food-price effects wane. Some dissenting board members questioned inflation's near-term durability.
  • Real interest rates at significantly negative levels permit gradual tightening toward the estimated 1-2.5% neutral range, with markets pricing 1.0% by mid-2026. Limited runway and external risks may constrain the pace of normalisation.
October 30, 2025
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BOJ Holds: Caution Amid Uncertainty

  • The BOJ held rates at 0.5% as expected, with a 7-2 vote showing continued division. A December hike is now priced at 50-55%, down from 68% pre-Takaichi.
  • Inflation forecasts are unchanged at 2.7% (FY25), 1.8% (FY26), with sluggish underlying price growth and downside economic risks delaying tightening.
  • Wage sustainability and trade policy uncertainty dominate the outlook. 2026 labour talks and corporate profit trends will determine the rate path timing.
September 19, 2025
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BOJ Policy Shift Despite Rate Hold

  • The BOJ held rates at 0.5% with a 7-2 vote. Hawkish dissent from Takata and Tamura voting for 0.75% signals rising tightening pressure within the board.
  • Surprise ETF/J-REIT disposal announcement (¥330bn/¥5bn annually) marks a significant normalisation step despite external trade headwinds.
  • Core inflation at 2.7% remains above target. Overall, October rate hike expectations rise to 55% after the hawkish tone despite the hold decision.

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