Bank of America: BOJ rate hikes may be slower than inflation requires

In a report on June 10, Bank of America (BofA) analyzed that the Bank of Japan's (BOJ) pace of interest rate hikes could be more gradual than what inflation forecasts demand. BofA projects the BOJ will implement a 25 bp hike in October of this year, followed by further increases in March and July 2027, ultimately raising the terminal rate to 1.75% by the end of 2027. However, the report noted that this gradual approach risks the BOJ falling behind the inflation curve. It added that if inflationary pressures prove stronger than expected, the BOJ may need to raise rates faster or set a higher terminal rate to return inflation to its target.