BOJ May Hike Rates to 1.5% Under Ueda, Says Former Board Member

The Bank of Japan (BOJ) is likely to raise its benchmark interest rate to 1.5% before Governor Kazuo Ueda’s term ends in 2028, former board member Makoto Sakurai told Reuters.

Multiple Hikes Expected

Sakurai, who remains in close contact with BOJ policymakers, predicted at least four more hikes. He expects one increase by year-end, two more in fiscal 2026, and another one or two before March 2028.

“The BOJ will steadily raise rates and normalize monetary policy,” Sakurai said. He added that Japan’s economy is strong, supported by higher corporate profits from price hikes and exports boosted by a weaker yen.

Timing of Next Hike

The BOJ raised its short-term policy rate to 0.5% in January, but has held steady since. Policymakers want more time to assess the economic effects of U.S. tariffs.

Sakurai believes the next hike could come in October or December. The central bank’s tankan business survey, due on October 1, will be a key factor. A strong survey showing resilience in corporate morale and profits could support an October move.

However, Sakurai cautioned that the BOJ still lacks hard data on the long-term impact of U.S. tariffs. He noted that two of the bank’s nine board members dissented in September, which may have been a signal to markets that a hike is approaching.

Market Outlook and U.S. Pressure

A recent Reuters poll showed most economists expect a 25-basis-point hike by year-end, though some see a delay until January.

Sakurai also said U.S. pressure could influence BOJ policy. Washington’s weak-dollar stance, reinforced by Treasury Secretary Scott Bessent, suggests Japan may need to raise rates faster. A joint U.S.-Japan statement in September reaffirmed market-based exchange rates, warning Tokyo against intervening to weaken the yen.

“With the Federal Reserve cutting rates and the BOJ preparing to hike, the yen will likely strengthen against the dollar,” Sakurai said.

Governor Ueda’s current term runs until April 2028.