Sumitomo Mitsui DS Asset Management
Published
15/10/2026
Read time 8 minutes
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Highlights:
  • Although the Bank of Japan (BOJ) raised its policy interest rate from 1.00% to 1.25% in September 2026, it maintains a stance toward continued rate hikes. We expect the policy rate to be raised to 1.75% during the current tightening cycle.
  • While it is necessary to note that corporate resilience to rising interest rates varies by industry and firm size, we believe it is
    strengthening for corporate Japan as a whole. As evidence, this paper highlights two key factors: (1) restraint on the interest payment burden through strengthened financial health, and (2) corporate profitability that exceeds borrowing costs.

 

BOJ rate hikes expected to continue, but corporate resilience to rising rates is strengthening


At its Monetary Policy Meeting in September 2026, the Bank of Japan (BOJ) decided to raise its policy interest rate. This move brought the policy rate to 1.25%; however, the BOJ assesses that financial conditions remain accommodative and maintains its policy of continuing to raise rates.

We anticipate additional rate hikes of 0.25 percentage points each in January and June 2027. We project the policy rate will reach 1.75%, which is roughly at the midpoint of the BOJ’s estimated neutral interest rate range (1.1% to 2.5%).

Read the full article here 

 

 

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Richard HAXE

Managing Director, Head of Business Development

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Alex BARRY

Executive Director, Head of Distribution - UK and Ireland

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Chloé CHOQUIN

Director, Business Development & Client Relations

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Thomas CARTWRIGHT

Director, Business Development & Client Relations

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