Bank of Japan's Policy Rate Unlikely to Rise Above 2% -- Market Talk

0806 GMT - The Bank of Japan's policy rate isn't likely to rise above 2%, as this would likely push the central bank into restrictive territory, says Capital Economics' Marcel Thieliant in a note. After the central bank raised interest rates to 1.25%, Thieliant reckons it could tighten policy more rapidly than anticipated in the coming months. Capital Economics projects the BOJ to lift its policy rate to 2% as soon as mid-2027, he says, noting that the view is more aggressive than what financial markets are pricing in. The head of Asia Pacific says risks are tilted towards the policy rate reaching a lower peak than expected, given Japan's planned sales tax cut in April could reduce inflation to very low levels. (megan.cheah@wsj.com)

(END) Dow Jones Newswires

September 18, 2026 04:06 ET (08:06 GMT)