Fitch are forecasting a Bank of Japan rates to 1% (by the end of 2026!)

Earlier this week I posted on the Ftich analysts’ site about the FOMC:

• Fitch says Fed’s next easing cycle will be moderate and slow

Fitch Now on the Bank of Japan:

• The Bank of Japan says it is “resisting the global trend toward monetary easing, raising interest rates more aggressively than we anticipated in July. This reflects its growing conviction that re-inflation is now firmly in place.”
• Core inflation above BOJ target for 23 straight months
• Frames ready to offer ‘sustained’ and ‘significant’ pay increases
• The situation is quite different from the “lost decade” of the 1990s when wages failed to grow amid ongoing deflation.
• The Bank of Japan’s goal is a “virtuous wage and price cycle.”
• Bank of Japan confident in ability to continue raising interest rates towards neutral settings

Fitch’s forecasts include:

• 0.5% by the end of 2024
• 0.75% in 2025
• 1% by the end of 2026

He concluded:

• “The Bank of Japan’s adoption of a tighter monetary policy could lead to continued global repercussions.”

USD/JPY Update:

This article was written by Eamonn Sheridan on www.forexlive.com.