Former Bank of Japan official Seiji Adachi said the case for a rate hike next month is now effectively in place, aligning with what he described as a broadly priced-in market view. In his remarks, Adachi said the BOJ has been pushed into a difficult position because investors have already largely factored in a move. If the central bank does not raise rates, he said, the yen could weaken sharply again.
Adachi also referred to comments from U.S. Treasury Secretary Bessent, who said policy action is needed after foreign-exchange intervention and expressed hope that BOJ Governor Kazuo Ueda would raise rates. According to Adachi, Bessent has repeatedly signaled that the BOJ will be the next institution to act, leaving the Japanese government in a weak position to oppose such a decision.
He added that Japan’s inflation momentum remains strong. If the BOJ delivers a hike in September as expected, Adachi said another move could follow in January next year. He also said the tightening cycle could last for some time and may even go beyond the 1.25% or 1.5% levels that had previously been seen as the endpoint of this cycle.
Former Bank of Japan official Seiji Adachi said the BOJ is very likely to raise interest rates next month, a move he said would confirm what the market has already largely priced in.
In an interview, Adachi said: 「The Bank of Japan has basically been cornered. The market has almost fully priced in a rate hike. If the central bank does not move, the yen could weaken sharply again.」
Earlier, U.S. Treasury Secretary Bessent said policy action is needed after foreign-exchange intervention and added that he hopes BOJ Governor Kazuo Ueda will raise rates.
Adachi said: 「Bessent has repeatedly hinted that the Bank of Japan will be the next institution to act. Given that, the government cannot tell the BOJ not to do it.」
He also said Japan’s inflation momentum remains strong. If the BOJ raises rates in September as expected, he said, it will likely continue with additional hikes.
Adachi added: 「I think the Bank of Japan will act again in January next year. The rate-hike cycle is very likely to continue for some time, and it may even go beyond the 1.25% or 1.5% levels that had previously been seen as the endpoint of this cycle.」
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