Former central bank chief economist Seisaku Kameda indicated that the policy benchmark will climb toward a terminal target through regular quarterly increases. The next adjustment is anticipated for the December 17-18 gathering, though severe foreign market disruption or a collapse in artificial intelligence could postpone action until January. Domestic conditions remain favorable as consumer spending prepares to absorb price growth supported by an upcoming food sales tax cut.
Key points
Steady quarterly interest rate hikes are intended to counter stubborn price pressures spa…: Steady quarterly interest rate hikes are intended to counter stubborn price pressures sparked by costly energy and a depreciated yen.
Strong earnings alongside a scheduled sales tax cut on food are expected to help Japan's…: Strong earnings alongside a scheduled sales tax cut on food are expected to help Japan's economy weather tighter monetary policy.
An abrupt derailment of policy tightening would likely require major prolonged market vol…: An abrupt derailment of policy tightening would likely require major prolonged market volatility or a severe decline in U.S. economic growth.
Sources checked by our analysis pipeline: 1
TOKYO, Nov 6 : The Bank of Japan is expected to raise interest rates in December and keep lifting borrowing costs next year until they reach 2 per cent to combat mounting inflationary pressure, the central bank's former top economist Seisaku Kameda said on Friday.
The global market rout that sent Japanese stocks tumbling on Friday is unlikely to derail a rate hike next month unless volatility persists into the rup-up to the December 17-18 meeting, he told Reuters in an interview.
"The BOJ might pause if we see a full-fledged collapse in the AI boom that hits Japan's economy through a severe downturn in US growth," Kameda said.
Otherwise, the BOJ is likely to raise its policy rate to 1.5 per cent in December and keep hiking at a pace of roughly once a quarter until it reaches the terminal rate of 2 per cent, he said.
"Japan's economy can weather such rate hikes with corporate profits remaining strong and consumption likely to get support from a scheduled sales tax cut on food items," Kameda said.
Continental equity markets faced downward pressure as weakness across technology shares curtailed recent upward momentum. However, regional performance continues to demonstrate relative strength against major international counterparts over a longer timeframe. The latest index shifts confirm European equities are outpacing key Wall Street benchmarks for the current annual performance period.
High borrowing costs driven by the Bank of England's recent base rate increase to 4% continue to weigh heavily on purchasing power across Britain. This persistent affordability pressure has forced average residential values down to £296,285, defying initial predictions of market growth. Property analysts warn that the current slump will likely persist for several years before broader economic conditions stabilize.
Equity analysts at the investment bank adjusted their stance on the major logistics provider following a reassessment of its share potential. The move signals a more cautious perspective on the transport firm's near-term performance compared to the broader market. Investors are taking note as valuation gains appear increasingly constrained under current market expectations.