Takaichi aide sees BOJ hiking in September, then again by January

An economic adviser to Prime Minister Sanae Takaichi has revised his forecast, now expecting the Bank of Japan (BOJ) to raise interest rates at its September policy meeting. Takuji Aida, who serves on the government's key economic panel, said the central bank is likely to follow up with another increase by January next year.

Aida, a reflationist who has been among the most vocal opponents of monetary tightening, had previously projected the next hike for January 2027. He moved up his timeline, explaining that September offers a narrow window of opportunity before an extraordinary session of parliament convenes in early October. Lawmakers are set to debate, among other bills, legislation tied to Takaichi's proposal to suspend an 8% levy on food items for two years.

In a research note, Aida projected that after the September move, the BOJ would hike again by January, before settling into a rhythm of increases roughly every six months. He cautioned that an accelerated pace of tightening would weigh on the economy. Aida serves as chief Japan economist at Credit Agricole.

His remarks signal a broadening consensus within the dovish premier's administration on the need for further BOJ action, which could help arrest unwelcome yen depreciation. Markets have largely priced in a 25-basis-point increase, which would take the policy rate to 1.25% at the BOJ's meeting on September 17-18.

Expectations of a September move have been reinforced by recent comments from U.S. Treasury Secretary Scott Bessent, who last week voiced strong support for decisive monetary steps to combat yen weakness. BOJ Governor Kazuo Ueda has also indicated that the board will debate raising rates this month, with a focus on whether inflationary risks are heightening.

Finance Minister Satsuki Katayama has reiterated that monetary policy decisions rest with the central bank. Takaichi herself has not commented on monetary policy in recent days.