The possibility that Japan’s long era of low interest rates is coming to an end has emerged after the Bank of Japan raised rates to 1.0% and signaled a further rate hike in September. Reports have also increasingly pointed to changes in global capital flows.
The Bank of Japan reportedly raised its policy rate to 1.0% and signaled the possibility of another rate hike as early as September. This has fueled growing views that the end of the long-standing low-interest-rate environment is becoming a reality.
Wage increases reached a high 5%–7% in the 2026 spring wage negotiations, exceeding 5% for the third consecutive year. The shift in the wage and price paradigm is drawing attention as a structural change in the economy.
The global economic regime premised on low-cost funding flows is becoming a thing of the past, and the Bank of Japan’s monetary policy normalization is expected to affect global capital flows and market dynamics.