Institution: The Bank of Japan may raise interest rates to 0.5% in December

Economist Ko Nakayama from Okasan Securities stated in a research report that the Bank of Japan may raise interest rates from 0.25% to 0.5% in December, due to improvements in wage levels after inflation adjustment. If the Bank of Japan becomes more confident about the virtuous cycle of prices and wages, it might increase policy interest rates by 25 basis points every six months while keeping an eye on market impacts. Nakayama predicts that the Bank of Japan will raise its target interest rate to 0.75% in June 2025, and then to 1% in December 2025. Nakayama added that the current terminal rate for Japan could be around 1%.