French bank BNP Paribas has raised its outlook for the Japanese terminal interest rate to 2.5%.

The French bank in Paris has revised its expectations for Japan's terminal interest rates, raising them from the previous forecast of 2.00% to 2.50%. The bank's economist, Ryutaro Kawano, expects the Bank of Japan to maintain a gradual tightening pace of increasing interest rates every four to five months. He predicts that the policy rate of the Bank of Japan will reach 1.25% by the end of 2026, 2.00% by the end of 2027, and eventually hit the terminal upper limit of 2.50% in September 2028. He stated that in the background of continued downward pressure on the yen, the inflation rate may continue to remain above the Bank of Japan's 2% target. "The future administration of Takamitsu Hayashi is expected to maintain a passive stance on tolerating rate hikes."