The IMF said it expects the Bank of Japan to deliver one more rate increase to move policy closer to neutral, but that subsequent adjustments should remain flexible amid rising global uncertainty. IMF staff estimate Japan’s neutral rate at 1.1–2.2% (midpoint ~1.5%); the BOJ’s current policy rate of 1.25% is within that range. The IMF warned that sustained high energy prices and greater corporate pass-through of costs will keep upward pressure on inflation, which it expects to rise above 2% and t

The IMF said it expects the Bank of Japan to deliver one more rate increase to move policy closer to neutral, but that subsequent adjustments should remain flexible amid rising global uncertainty. IMF staff estimate Japan’s neutral rate at 1.1–2.2% (midpoint ~1.5%); the BOJ’s current policy rate of 1.25% is within that range. The IMF warned that sustained high energy prices and greater corporate pass-through of costs will keep upward pressure on inflation, which it expects to rise above 2% and then gradually return toward that level by end-2027.