Barclays economists said remarks by Bank of Japan policy board member Koeda reinforced the case for further tightening. Koeda said Japan’s neutral rate could be “well above 1%” and that adding a 2% inflation rate to potential growth implies a neutral rate possibly above 2%. Barclays forecasts a 25bp hike in Dec 2026, followed by further increases in Mar and Jul 2027, taking the policy rate to a 2% terminal level.

2026-10-15

Barclays economists said remarks by Bank of Japan policy board member Koeda reinforced the case for further tightening. Koeda said Japan’s neutral rate could be “well above 1%” and that adding a 2% inflation rate to potential growth implies a neutral rate possibly above 2%. Barclays forecasts a 25bp hike in Dec 2026, followed by further increases in Mar and Jul 2027, taking the policy rate to a 2% terminal level.