Takaichi’s reflationist aide projects Bank of Japan rate hike in September

Prime Minister Sanae Takaichi's reflationist adviser, Takuji Aida, predicts the Bank of Japan will raise interest rates in September 2025 and continue quarterly hikes until January 2026. Aida, a vocal critic of BOJ rate hikes, revised his forecast from January 2027 to September 2025, citing a limited window for a hike before parliament convenes early October.

This accelerated pace of rate hikes could negatively impact the economy, according to Aida, who serves on the government's key economic panel. The remarks indicate a consensus within Takaichi's administration for additional BOJ rate hikes to curb yen depreciation. Markets are nearly certain of a 25 basis point increase to 1.25% during the BOJ's meeting on September 17-18.

U.S. Treasury Secretary Scott Bessent has been advocating for higher BOJ rates, adding support to the possibility of a rate hike in September. BOJ Governor Kazuo Ueda has indicated a strong likelihood of a September hike, focusing on inflationary risks. Bessent's remarks on BOJ policy were echoed by Finance Minister Satsuki Katayama, who maintained that monetary policy decisions lie with the central bank. Takaichi has not commented on monetary policy recently.