TOKYO, Sept 7 (Reuters) – The Bank of Japan is likely to raise interest rates in September and keep hiking at a pace of once every quarter until January next year, Takuji Aida, an economic adviser to Prime Minister Sanae Takaichi said on Monday.
Aida, a reflationist seen as among the most vocal opponents of BOJ rate hikes, said he was pushing forward his forecast of the next increase from January 2027, as September provided a narrow window of opportunity for a hike before an extraordinary session of parliament convenes in early October.
Parliament will debate, among other bills, legislation for Takaichi’s plan to suspend for two years an 8% levy on food items.
After the September rate hike, the BOJ will likely follow up with another increase by January next year, Aida said in a research note. “After that, the BOJ will revert to a hike of around once every six months.”
“The premature, accelerated pace of rate hikes would weigh on the economy,” said Aida, chief Japan economist at Credit Agricole.
The remarks by Aida, who is a member of the government’s key economic panel, suggest broadening consensus within dovish premier Takaichi’s administration of the need for further BOJ rate hikes that could help arrest unwelcome yen falls.
Markets have nearly fully priced in the chance the BOJ will raise its policy rate by 25 basis points to 1.25% at its next policy meeting on September 17 and 18.
Prospects of a September rate hike heightened as U.S. Treasury Secretary Scott Bessent continued to call for higher BOJ rates last week, when he voiced strong support for “decisive” monetary steps to combat yen weakness.
BOJ Governor Kazuo Ueda said last week the BOJ will debate raising rates including in September with a focus on whether inflationary risks were heightening, signalling a strong chance of a hike this month.
When asked about Bessent’s remarks on the BOJ, Finance Minister Satsuki Katayama has repeated that monetary policy decisions were the responsibility of the central bank. Takaichi has not made comments on monetary policy recently.
(Reporting by Leika Kihara; Editing by Sam Holmes)
