BNP Paribas: Raises Japan's Final Interest Rate Forecast to 2.5%

Golden Ten Data reported on July 3 that BNP Paribas has revised its forecast for Japan’s terminal interest rate, raising it from the previous estimate of 2.00% to 2.50%. The bank’s economist, Ryutaro Kono, expects the Bank of Japan to maintain a gradual tightening pace, raising rates roughly once every four to five months. He stated that the Bank of Japan’s policy rate is expected to reach 1.25% by the end of 2026, 2.00% by the end of 2027, and ultimately hit the terminal rate cap of 2.50% in September 2028. He pointed out that, due to the anticipated continued downward pressure on the yen, inflation may remain above the Bank of Japan’s 2% target. “The Kishida administration is expected to continue passively tolerating future rate hikes.”