Revising our policy rate outlook: We now see BoJ hiking in April and project terminal rate of 1.5%
Key points
We have revised our BoJ policy rate outlook and now see next rate hike coming in April instead of July
We have raised our projection for terminal rate and anticipate subsequent hikes to 1.25% in October 2026 and to 1.50% in April 2027
Three factors helped change our outlook: 1) upward revision to our price outlook, 2) LDP’s landslide Lower House election victory, and 3) growing central bank concerns about upside risks to prices