A former executive director of the Bank of Japan predicts up to four interest rate hikes by 2027. The central bank is widely expected to raise borrowing costs to 0.75% on December 19, its first move since January, with three more increases potentially following. Governor Kazuo Ueda will likely indicate that the cycle is not over even after this hike, according to Hideo Hayakawa.
Hideo Hayakawa, a former executive director of the Bank of Japan, discussed the central bank's policy trajectory in an interview on Wednesday, December 11. He indicated that Governor Kazuo Ueda's path may involve as many as four rate increases by 2027, including three more after the anticipated hike next week.
"They are probably thinking they have completely fallen behind the curve," Hayakawa said. "Ueda will probably indicate that it’s not the end of the cycle even after raising the rate this time."
The Bank of Japan is broadly expected to raise borrowing costs to 0.75% on December 19, marking its first adjustment since January. A key focus for markets will be how the bank describes its future policy outlook.
Hayakawa suggested the terminal rate is likely around 1.5%. His comments reflect expectations that the central bank is accelerating efforts to meet its inflation targets.
