Regarding the upcoming interest rate hike by the Bank of Japan, the market has already reached a broad consensus on a 25 basis point increase in December. But what happens after that? Predictions from major institutions show clear divergence.

Wells Fargo believes the central bank will raise rates by another 25 basis points in the third quarter of next year, with the policy rate potentially reaching 1% by the end of the year. ANZ Bank takes a more conservative stance, expecting the next rate hike to occur in April 2026, when the central bank will have more comprehensive data on Japanese wage growth. JPMorgan offers a more evenly spaced timetable—about a rate hike every six months, but the exact timing will depend on how the government adjusts its macroeconomic policies.

T. Rowe Price appears relatively aggressive, suggesting the central bank might accelerate rate hikes faster than the market expects, possibly even twice next year. In contrast, Investinglive’s view is much more cautious; they believe Governor Ueda and his team are unlikely to take a hard stance, with a more realistic window for action being October next year.

Reasons supporting a rate hike vary as well. Capital Economics emphasizes that recent Japanese CPI data has signaled a green light for hikes, with core inflation likely to stay above the central bank’s forecasts. Rabobank points out that inflation remains above historical targets and political opposition is weakening, leading to an expectation that rates could reach 1% before July. ING Bank approaches from a different angle—strong export performance gives the BOJ confidence to raise rates.

However, Morningstar warns that wage growth momentum is the key factor in timing rate hikes, and the true signals in this regard will only become clear by March next year. Until trade uncertainties ease, the central bank’s actions will need to remain cautious. Overall, the path of Japan’s interest rate hikes in 2026 is far from smooth, and market participants remain eager and skeptical about what Governor Ueda and his team will do.