Japan Macro Weekly

Latest edition · July 13, 2026

Japan Macro (1)

Mizuho’s macro team forecasts a gradual path for BOJ rate hikes, projecting a 1.5% terminal rate. Despite volatility in bond yields and energy-related inflation concerns, the economy is expected to continue growing in line with potential.

This report outlines Japan's macroeconomic and policy outlook as of July 13, 2026. The authors expect the Bank of Japan to raise interest rates to 1.5% by June 2027, dismissing current market expectations of 2% as excessive. The domestic economy shows resilience, with positive real wage growth and firm business investment, though it faces risks from energy prices and fiscal policy uncertainty under the Takaichi administration. Market attention remains focused on the BOJ's reaction to inflation targets and geopolitical developments involving Iran.

Key takeaways from the latest edition

• 1.The Bank of Japan is expected to maintain a gradual rate hike path, with the policy rate projected to reach 1.25% by December 2026 and 1.50% by June 2027.
• 2.Domestic bond yields saw volatility due to fiscal policy concerns and geopolitical tensions in Iran, with 10y JGB yields touching 2.900% before retreating.
• 3.Real wage growth remains positive but faces potential headwinds from inflationary pressures linked to energy prices; consumer spending remains firm.

What this series covers

• Review of key indicators and events
• Economic indicators
• BOJ-related events
• Economic outlook (as of 13 July)
• Comments on real GDP outlook
• Comments on CPI outlook
• Comments on domestic rates outlook
• Important Disclosure Information
• Analyst Certification
• Disclaimer

Edition archive

• Japan Macro (1)

  July 13, 2026

• Japan Macro

  June 29, 2026

• Japan Macro (1)

  June 15, 2026

• Japan Macro

  June 8, 2026

• Japan Macro

  June 1, 2026

• Japan Macro (1)

  May 26, 2026