This article examines the possibility of additional rate hikes in the US and Japan before year-end, the next moves by the FRB and the Bank of Japan, and their impact on the yen and stock prices. The FRB raised rates in September, while the Bank of Japan continues to assess its next decision based on wage and price trends.
Heading toward the end of 2026, the focus of US and Japanese monetary policy is on the timing and scale of additional rate hikes. At its September FOMC meeting, the FRB raised the policy rate to 3.75–4.00% and revised its dot plot outlook upward, but an additional rate hike before year-end is not certain and will depend on incoming data.
At its September Policy Board meeting, the Bank of Japan raised the policy rate from 1.00% to 1.25%, but the vote was split, leaving policymakers to assess wage growth and price trends going forward. The Bank intends to carefully assess the sustainability of inflation and its impact on the domestic economy while taking into account exchange-rate movements and the effect of import prices.
Market participants expect the timing of a year-end rate hike to shift depending on the data, with the key question being whether wage and service-price increases will continue. Further yen depreciation and rising import prices could affect the burden on households and companies, and the next moves by the FRB and the Bank of Japan are expected to spill over into the stock market.
The focus will now shift to revisions to the economic and price outlook at the monetary policy meeting at the end of October, remarks by Bank of Japan Governor Ueda (植田), and how wage and service-price trends will affect consideration of additional rate hikes from year-end into the start of the new year.