The Bank of Japan could pivot from its current posture of tolerating elevated inflation to actively fighting it as early as December, according to Tsutomu Watanabe, a former central bank official and price expert.
Watanabe’s forecast suggests a significant acceleration in the pace of interest rate hikes, moving beyond the gradual normalization path that has characterized the BoJ’s recent policy shifts.
Governor Kazuo Ueda has previously signaled readiness to implement additional rate increases if inflation risks overshooting the 2% target materialize, reinforcing the possibility of a sharper policy turn.
This prediction aligns with growing concerns within the central bank about upside inflation risks.
Internal monitoring indicates that the BoJ is closely watching data that could necessitate a more aggressive tightening cycle than financial markets have currently priced in.
Governor Kazuo Ueda has previously signaled readiness to implement additional rate increases if inflation risks overshooting the 2% target materialize, reinforcing the possibility of a sharper policy turn.
The potential for a more hawkish stance by December adds pressure to Japanese government bond yields and the yen.