Former central bank board member Makoto Sakurai told that Kazuo Ueda’s remaining term through early 2028 will likely see three more rate hikes to 1.5%.

Sakurai said the first raise to 1.0% could happen in June or July next year dependent on the U.S. economy and domestic wage and pricing trends.

In an interview, he warned more rate increases would bring borrowing costs closer to neutral economic levels and elicit criticism from reflationist advisors of dovish premier Sanae Takaichi.

“The BOJ may estimate 1.75% as the neutral rate, but won’t tell. Sakurai, who works closely with officials, said a 1.5% boost would be comfortably below that level and allow the BOJ to lower rates if needed.

He suggested the BOJ may hike rates twice in the next fiscal year starting in April 2026 if U.S. growth supports Japan’s economy and domestic inflation maintains above 2%.

On Friday, the BOJ boosted interest rates to 0.75% from 0.5%, bringing borrowing prices to a 30-year high and ending decades of massive monetary stimulus.
The BOJ’s policy rate boost to 0.75% brings it closer to Japan’s neutral rate, which neither cools nor stimulates the economy, at 1.0%-2.5%.