Qatar National Bank (QNB) expects the Bank of Japan to enter a new phase of monetary policy tightening, including raising interest rates, after decades of deflationary pressures and extremely low interest rates.
The Bank of Japan explained in its weekly report that it believes the fundamental drivers of prices are still trending upwards, which reinforces its tendency to tighten monetary policy to keep pace with the shift in wage and price dynamics, coinciding with the escalation of the war in the Middle East and the resulting strong shock to energy prices.
The report predicted that the interest rate would reach 1% by mid-2026, with expectations of it stabilizing at a final level between 1.25% and 1.5%, depending on developments in wages, energy prices and movements of the yen.
