Multiple Brokerages Expect BOJ Rate Hike in December, Tightening to Continue Through 2027
nashnova research
After the Bank of Japan raised its policy rate to a 31-year high of 1.25% in September, over ten major brokerages now expect another hike in December or January — the debate is not over direction, but over how far the tightening goes.
Where does the BOJ stand now?
The policy rate sits at 1.25% after September's hike — the highest since 1994.
This means → Japan's two-decade era of zero and negative rates is officially over; the BOJ is now in a sustained hiking cycle.
The next policy meeting is set for October 30, but most houses expect a hold; the real window is December.
How are brokerages positioning?
Hawks: JPMorgan and TD Securities are the most aggressive, each calling four hikes of 25 basis points — JPMorgan at December, then April, July, and December next year; TD roughly once per quarter.
Consensus camp: Citi and Bank of America Global Research expect three hikes (December → March → July); Morgan Stanley and Nomura expect two (December → March).
Cautious camp: Goldman Sachs, Deutsche Bank, and UBS Wealth push the first hike to January, followed by one more; HSBC and Standard Chartered are the most conservative — just one hike in Q1 2027.
In plain terms = every single house agrees more hikes are coming; the only question is "how many, and when does it stop."
Where is the real disagreement?
The first-hike window sits between December this year and January next year — a one-month gap that matters little.
The real divide is on the terminal rate — where the BOJ ultimately stops: hawks see it near 2.25%, while the cautious camp sees roughly 1.50%.
This means → hawks believe the Japanese economy can absorb higher rates; the cautious camp worries that hiking too fast could choke the recovery.
What does this mean for markets?
A December hike would likely strengthen the yen — higher rates make holding yen more attractive, pulling capital back.
This reflects a deeper signal: the era of "cheap yen" is winding down, and the carry trade — borrowing low-rate yen to buy higher-yielding currencies — is being squeezed with every hike.
In plain terms = each BOJ rate increase forces a global re-pricing, because the yen is the biggest source of low-cost funding in the global carry trade; when the fuel gets expensive, the whole chain moves.
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