Experts expect the BOJ’s policy rate to peak at 2%, while pointing out that it could reach 2.5% in some scenarios. The BOJ governor’s term and the burden on public finances were cited as factors behind that assessment.
For people considering a mortgage, experts offer their views on the choice between fixed-rate and floating-rate mortgages as the BOJ continues to raise interest rates. The view that borrowers should choose floating rates is based on the premise that the policy rate has a practical ceiling.
The reasons cited for a 2% ceiling include the political consideration that the current governor’s term runs for an extended period through March 2028, as well as the government’s fiscal burden from JGB interest payments and its desire to avoid rapid rate hikes. In addition, the BOJ has been taking steps to curb yen weakness, while inflation is attributed to yen weakness and higher crude oil prices but is not expected to accelerate rapidly.
Some analysts believe the outlook of “a 2% ceiling, or around 2.5% at most” is unlikely to be significantly off the mark for the foreseeable future. However, interest-rate trends may change depending on the structural conditions of the Japanese economy and the government’s monetary policy. When choosing a mortgage, borrowers are advised to carefully assess the potential range of rate movements and their repayment plans.