Bank of Japan Interest Rate Hikes Expected

WASHINGTON (Reuters) – The Bank of Japan is expected to hike interest rates twice in 2025 and twice more in 2026, according to International Monetary Fund chief economist Pierre-Olivier Gourinchas.

In its latest World Economic Outlook, the IMF forecasts that Japan’s economy will grow by 1.1% in 2025, moderating to 0.8% growth in 2026, with no changes to its October forecast.

Gourinchas stated, “We’re … expecting that there will be something like two more rate hikes by the Bank of Japan in 2025 and two additional rate hikes in 2026,” emphasizing that a gradual pace of tightening is warranted to help the economy meet its inflation target.