BOJ May Restart Rate Hikes In December, Economist Says

ore cautious approach, which aimed to avoid choking off demand after decades of very low price growth. Kameda’s bigger worry isn’t domestic conditions but an external shock: if a US downturn tied to a pullback in AI investment hit global growth hard, the BOJ could pause. Otherwise, he argues Japan is better placed to handle higher rates, with corporate profits still solid and a weak yen and higher energy costs keeping price pressures alive.

For markets: A 1.5% BOJ rate in December would refocus attention on USD/JPY and short-term JGB yields.

Kameda isn’t talking about “one more hike” so much as a new rhythm that markets can price: quarterly moves toward 2%. Faster tightening tends to narrow the Japan-US interest -rate gap, which can reduce the appeal of borrowing in yen to fund higher-yielding bets elsewhere, a dynamic that can accelerate yen moves when markets get jumpy. It also hits closest to home in the front end of Japan’s government bond curve, where yields are most sensitive to the next few policy meetings. Put together, a stronger yen and higher short-term rates can change the backdrop for Japanese stocks, especially exporters, heading into the December meeting if volatility doesn’t cool.