Expectations of an accelerated pace of US Federal Reserve rate hikes are rising, shifting the relative rate-hike pricing in Japan and the US toward the Federal Reserve. Forecasts through March 2027 are reported to be about 2.6 hikes for the Federal Reserve and about 1.5 for the Bank of Japan, with the gap expected to widen.
Expectations are rising in financial markets that the US Federal Reserve will accelerate its pace of rate hikes, and a gap is emerging between Japan and the US in overall market pricing of rate hikes. According to reported figures, the number of rate hikes expected from the Federal Reserve is set to substantially exceed that expected from the Bank of Japan. The article compares the interest-rate outlooks for the two countries.
Specifically, the outlook through March 2027 is for about 2.6 rate hikes by the Federal Reserve and about 1.5 by the Bank of Japan, resulting in a gap of more than 1 hike. The Federal Reserve's upcoming meeting dates are listed as 8–9 December, 26–27 January next year and 16–17 March.
These developments are occurring as the Japan-US interest-rate differential again comes into focus, and market participants say the Federal Reserve's policy lead is becoming more pronounced. Attention will focus in subsequent reports on the outcome of each meeting and any changes to the rate-hike outlook.