Commerzbank’s Volkmar Baur anticipates that the Bank of Japan (BoJ) will implement two additional rate hikes in 2026, moving its policy rate closer to a rising neutral rate and supporting gradual gains for the Japanese Yen against both the US Dollar (USD) and Euro (EUR) in the second half of the year [1]. According to Baur, the current BoJ policy rate of 0.75% remains below even the lowest estimate of the neutral interest rate, indicating that financial conditions are still stimulative and the key interest rate has not yet reached a neutral level [1].
Baur asserts that this environment supports the view that the BoJ will raise interest rates two more times this year [1]. He further projects that USD/JPY and EUR/JPY exchange rates will edge lower from current levels into late 2026 and 2027, reflecting a modest appreciation of the Japanese Yen [1].
The expected pricing out of rate hike expectations in the US and Europe is seen as a factor that should cause the Japanese Yen to appreciate against the USD and EUR in the second half of the year [1]. No specific market reactions or analyst opinions beyond Commerzbank’s projections are mentioned in the article [1].
CONCLUSION
Commerzbank forecasts two additional BoJ rate hikes in 2026, which are expected to support a gradual appreciation of the Japanese Yen against the USD and EUR. The current policy rate remains below the neutral level, suggesting further tightening is likely. Market participants may anticipate lower USD/JPY and EUR/JPY rates into late 2026 and 2027.