BNP Paribas has raised its forecast for Japan's terminal policy rate to 2.50%
from 2.00%. Economist Ryutaro Kono expects the Bank of Japan to pursue graduation
tightening, hiking roughly every four to five months, taking the policy rate to
1.25% by end-2026, 2.00% by end-2027 and a terminal 2.50% in September 2028. He
cites persistent yen downside pressure and inflation likely to remain above the
BOJ's 2% target. The bank says the government is expected to remain passively
tolerant of further rate rises.
