Former Bank of Japan official predicts: After the rate hike in December, there may be three more hikes.

According to a former executive director of the Bank of Japan, the policy path of the Bank of Japan Governor Haruhiko Kuroda may include four interest rate hikes by 2027, with three of them coming after the highly anticipated rate hike next week. Former Bank of Japan official Hideo Hayakawa stated in an interview on Wednesday, "They may think they have fallen behind the situation completely. Kuroda may suggest that even if rates are raised this time, it is not the end of the cycle." At the time of Hayakawa's comments, markets are widely expecting the Bank of Japan to raise borrowing costs to 0.75% on December 19, the first rate hike since January. The key focus of this rate meeting will be how the Bank of Japan defines its future policy direction. Hayakawa said, "They may go back to a frequency of raising rates about every six months." He believes that the eventual rate may be around 1.5%, which means that in addition to the expected rate hike next week, three more hikes may be needed. For those following the Bank of Japan's dynamics, the key is whether the central bank will provide any guidance on Japan's neutral rate. The neutral rate is the level of interest rates that neither stimulates nor restrains the economy. The Bank of Japan has previously stated that this level is between 1% and 2.5%. Hayakawa indicated that authorities may narrow the range of interest rate forecasts based on updated data, but he expects more information to be released when the Bank of Japan updates its quarterly economic outlook in January. Hayakawa, who has known Kuroda for over 40 years, pointed out that Kuroda's attitude towards the meeting next week was almost unequivocal and a series of comments collectively sent a strong signal. Kuroda indicated that the authorities will make the right decision on whether to raise rates, and even if they do, policy conditions will remain accommodative seemingly to preempt any criticism that his policy stance may differ from the government's fiscal policy. Hayakawa stated: "Kuroda has almost clearly indicated that rates will be raised." He also noted that some believe it would be more meaningful to decide on a rate hike in January next year, so that relevant departments can collect more data on next year's wage growth momentum. Hayakawa stated that the delay in this rate hike should not be blamed on the Bank of Japan, as the Bank of Japan must closely monitor many uncertainties related to Trump's tariff measures and the timing of Fumio Kishida's assumption of office as Japan's new Prime Minister. Hayakawa, a former chief economist at the Bank of Japan, warned that Kishida's expansionary fiscal policy may force the Bank of Japan to accelerate its rate hikes and push up the final rate. Kishida unveiled a comprehensive economic stimulus plan last month, with additional spending exceeding economists' expectations. Hayakawa stated that Kishida, in order to stimulate an economy that does not lack demand, is creating huge fiscal debts, and her fiscal spending to alleviate inflationary effects is more likely to ultimately exacerbate price pressures. Hayakawa added: "This is quite risky, and with this in mind, Kuroda may feel that he is lagging behind."