Takaichi Aide Takuji Aida Projects BOJ Rate Hike in September

Japanese economic adviser Takuji Aida shifted his Bank of Japan rate-hike forecast forward to September, signaling a growing consensus within Prime Minister Sanae Takaichi's administration to arrest persistent yen weakness. This timeline acceleration highlights mounting political and economic pressure on the central bank to normalize monetary policy.

"The premature, accelerated pace of rate hikes would weigh on the economy," said Takuji Aida, chief Japan economist at Credit Agricole, in a report cited by Investing.com.

September Hike and Quarterly Trajectory

Under the revised projection, Aida expects the Bank of Japan to implement an interest rate increase at its upcoming policy meeting on September 17 and 18. Following that anticipated move, the central bank is projected to continue raising rates at a pace of once every quarter until January of next year.

Financial markets have nearly fully priced in the probability that policymakers will lift the benchmark policy rate by 25 basis points to 1.25% during the September gathering. Basis points measure interest rate changes, with 100 basis points equaling 1 percentage point, making a 25-basis-point adjustment a standard quarter-point move.

International Pressure and Currency Concerns

External pressure has also mounted on Japanese monetary authorities to address currency depreciation. U.S. Treasury Secretary Scott Bessent recently called for higher BOJ rates, voicing strong support for decisive monetary steps to stabilize the yen against foreign currencies.

The push for tighter monetary policy from both domestic administration advisers and international officials marks a notable shift for Takaichi's reflationist camp, which has historically favored looser monetary conditions to support domestic growth. Addressing the foreign exchange value of the yen has taken precedence as imported energy and food costs squeeze domestic purchasing power.