Japan Economic Flash

Latest edition · September 18, 2026

Japan Economic Flash Continue to Expect Next Rate Hike in January Next Year

The Bank of Japan raised its policy rate by 25 bp to 1.25% at its September 17-18 meeting, signaling a new policy phase focused on anchoring underlying inflation at 2%. Goldman Sachs maintains its baseline forecast that the BOJ will hold rates in December and implement its next 25 bp hike in January 2027.

At its September 17-18 Monetary Policy Meeting, the BOJ raised its overnight call rate guidance by 25 bp to 1.25% in a 7-to-2 vote, with Governor Kazuo Ueda highlighting that the policy phase has shifted toward anchoring underlying inflation around 2%. Governor Ueda indicated that while monetary conditions remain accommodative, the BOJ does not see a need for consecutive or oversized hikes as it has not fallen behind the curve. Goldman Sachs reaffirms its expectation that the BOJ will hold in December 2026 to avoid market volatility around the FY2027 budget and JGB issuance draft, delivering its next rate hike in January 2027 followed by another in July 2027.

Key takeaways from the latest edition

• 1.The BOJ raised its policy rate guidance on the overnight call rate (TONA) by 25 bp to 1.25% by a 7-to-2 majority vote at its September 17-18 Monetary Policy Meeting.
• 2.Governor Ueda signaled that the 'policy phase has changed' toward anchoring underlying inflation at 2%, but expressed a negative view on consecutive or accelerated rate hikes.
• 3.Goldman Sachs maintains its projection that the next BOJ rate hike will take place in January 2027, followed by another hike in July 2027 to 1.50%, skipping December 2026 due to budget and JGB issuance timing.

Edition archive

• Japan Economic Flash Continue to Expect Next Rate Hike in January Next Year

  September 18, 2026

• Japan Economic Flash Continue to Forecast a September Policy Rate Hike

  September 9, 2026

• Japan Economic Flash Likelihood of Accelerated Rate Hikes Not High

  July 31, 2026

• Japan Economic Flash Raising Our FY2027 Inflation Forecasts Due to Weaker Yen, Higher Memory Chip Prices, and Rebound in Foo...

  July 16, 2026