World news and discussion on TalkFuse.
BOJ to hike in December, seek terminal rate of 2%, says ex-central bank top economist
Former Bank of Japan economist Seisaku Kameda expects the central bank to raise interest rates in December and continue increasing them next year towards 2 per cent. The forecast matters because inflation is strengthening and the BOJ has signalled a firmer effort to contain it.
Kameda said the policy rate could reach 1.5 per cent in December, followed by increases roughly once a quarter; if markets remain unstable, the next move could come in January instead. He said a prolonged market slump or a severe US downturn could delay tightening, while rising food and import costs are adding to inflation and a planned food sales tax cut may support consumption.
In short
- Kameda expects a December BOJ rate rise.
- He forecasts rates reaching 2 per cent.
- Persistent market turmoil could delay the move.
Steelman: both sides, in good faith
The strongest fair case each way — we don't pick a winner.
The case for
The case for raising rates is that stronger inflation, including higher food and import costs, risks becoming persistent, while continued low rates could add to price pressures and weaken confidence in the BOJ’s commitment to its inflation target. Gradual increases towards 2 per cent could help contain inflation while giving households and businesses time to adjust.
The case against
The case for caution is that higher rates could weigh on an already fragile economy, particularly if markets remain unsettled or the United States suffers a sharp downturn. Since some inflation is being driven by food and import costs, tightening may not quickly address its causes, but could raise borrowing costs and suppress consumption; waiting for clearer evidence would reduce that risk.