When will the Bank of Japan raise interest rates again? Explaining 2026 interest rate outlook and investment strategies to take now in FAQ format

Introduction

Kenji is a company employee in his 30s working in Tokyo. Amid the ongoing yen depreciation and rising prices, he feels uneasy relying solely on savings and is considering starting FX trading. However, he is overwhelmed by too much information: when the Bank of Japan will raise interest rates, how the yen exchange rate will move as a result, and which broker to choose.

This article explains the timing of the Bank of Japan's additional interest rate hikes in 2026 and the interest rate outlook in an easy-to-understand FAQ format. Furthermore, it introduces investment strategies you can put into practice right now, as well as how to choose an FX broker that even beginners can start with confidence. Even if you, like Kenji, "don't know where to start," reading this article should help you take the next step.

When Will the Bank of Japan Raise Interest Rates Again? 2026 Interest Rate Outlook

Policy Rate Has Already Reached 1.00%

The Bank of Japan (BOJ) ended its negative interest rate policy in March 2024, subsequently raising the policy rate to 0.25% in July 2024, and through gradual rate hikes, raised the policy rate to 1.00% at the June 2026 monetary policy meeting. We have already entered a phase of "how high will they go" rather than "will they start raising rates."

BOJ Governor Kazuo Ueda has emphasized that achieving the 2% inflation target sustainably requires "demand-driven inflation accompanied by wage increases." The continued aggressive wage setting by companies in 2026 is said to have been the decisive factor in the hike to 1.00%.

Next Rate Hike Likely in Late 2026

According to forecasts from major securities firms and economists, the next additional rate hike is widely expected around December 2026, in which case the policy rate would reach 1.25%. Nomura Securities expects rate hikes of 0.25% each in December 2026 and June 2027, with forecasts for a terminal rate of around 1.25–1.75% being prominent. Risks remain that the rate hike could be postponed if the global economy slows or financial markets become disrupted.

Beware of Rising Long-Term Interest Rates

In line with the policy rate hikes, long-term interest rates (10-year government bond yields) are also on an upward trend. The impact continues to spread to floating-rate housing loans and corporate funding costs, and both households and businesses are required to plan their finances on the assumption of rising interest rates.

Impact of the Bank of Japan's Interest Rate Hike on the FX Market

Yen Appreciation Pressure Intensifies

The Bank of Japan's interest rate hike will lead to a narrowing of the Japan-U.S. interest rate differential, becoming a factor for yen appreciation. In particular, if the Federal Reserve (FRB) shifts to rate cuts, the interest rate differential will narrow further, and the USD/JPY pair could see a significant move toward yen appreciation.

Beware of Increased Volatility

Around the time of the interest rate hike announcement, market speculation will clash, causing a sharp rise in exchange rate volatility. While this presents an opportunity for short-term traders, beginners need to be cautious about position sizing.

Increase in Swap Points

While a move toward yen appreciation is expected, the rise in interest rates will increase yen swap points (interest rate differential adjustment amounts). If holding a long yen position over the long term, there is a possibility of earning swap income.

Investment Strategy to Follow Now: 3 Steps for Beginners

Step 1: Practice with a Demo Account

Before risking real funds, get a feel for trading with a demo account. XM offers a free demo account where you can practice in a real market environment with $10,000 in virtual funds.

Recommendation: First, open an XM demo account and try trading under a scenario of a Bank of Japan rate hike. → Open an XM Demo Account

Step 2: Start Real Trading with Small Amounts

Once you are comfortable with the demo, begin trading with a small amount of real funds. With XM's Micro account, you can trade from 1,000 units, and the minimum deposit is as low as 5,000 JPY. Gain practical experience while keeping risk low.

Step 3: Make Fundamental Analysis a Habit

Register the Bank of Japan's monetary policy meeting schedule on your calendar and develop a habit of checking market expectations in advance. Thoroughly manage risk by adjusting positions around the release of key economic indicators (CPI, GDP, employment statistics).

Recommended FX Broker Comparison: XM vs Others

Which Broker is Recommended for Whom

• For beginners wanting to start with a small amount: XM is the best choice. The minimum deposit is low, and Japanese support is extensive. You can start with zero risk using the no deposit bonus.
• For those prioritizing high-speed trading like scalping: Company A, known for low spreads and fast execution, is worth considering.
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How to Open an XM Account: Complete in 5 Minutes

1. Visit the Official Website: Go to the XM Account Opening Page.
2. Enter Required Information: Input your name, email address, country of residence, etc.
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4. Select Account Type: Choose from Standard, Micro, Zero accounts, etc.
5. Deposit (Optional): To start real trading, deposit a minimum of 5,000 JPY. Not required for a demo account.
6. Start Trading: Download MT4/MT5, log in, and begin trading.

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FAQ

When will the Bank of Japan implement another rate hike?

The BOJ raised the policy rate to 1.00% in June 2026. The next additional rate hike is widely expected around December 2026. However, this may change depending on economic indicators and overseas conditions, so it is important to monitor the BOJ's announcements.

What will the policy interest rate be going forward?

According to major economist forecasts, the policy interest rate is expected to be around 1.25% after the next rate hike, with the final terminal rate expected to be around 1.25–1.75%. It is pointed out that further 0.25% hikes from the current 1.00% are possible.

Will the BOJ's rate hike lead to a stronger yen?

Generally, a rate hike is a factor that strengthens the domestic currency. If the interest rate differential between Japan and the U.S. narrows, the dollar-yen pair is likely to move in a yen-strengthening direction. However, actual movements will vary depending on the degree to which the market has already priced this in.

Can even a beginner in FX profit from the BOJ's rate hike?

It is possible, but periods of high volatility also carry significant risk. It is recommended to first practice with a demo account and start with a small amount. With $30 where eligible No-Deposit Bonus, you can gain experience with zero risk thanks to the no-deposit bonus.

Which FX broker should I choose?

For beginners, check XM official promotions is recommended as it allows starting with a small capital, offers comprehensive Japanese-language support, and has a bonus system. Refer to the comparison table and choose a broker that suits your trading style.

How can I receive a no-deposit bonus?

When opening an account with check XM official promotions, fill out the no-deposit bonus application form or request it via live chat. The bonus will be automatically reflected in your account and can be used for trading. Please check the official website for details.

Where can I check the BOJ's policy announcements?

The results of monetary policy meetings and minutes are published on the BOJ's official website. Major economic media outlets (Reuters, Bloomberg, Nikkei) also provide breaking news.

Summary: Kenji's Decision

After reading this article, Kenji decided to first practice with XM's demo account. He plans to hone his trading skills and practice with a small amount of real funds by the latter half of 2026, when the additional rate hike is expected. He chose a path to steadily gain experience while minimizing risk.

Would you like to take a risk-free first step like Kenji? With XM's no-deposit bonus, you can start FX trading without using any of your own funds.

Open a free XM demo account now

Risk Warning: CFD and foreign exchange trading involve high risk and may result in losses exceeding your initial investment. Beginners should first practice with a demo account or no-deposit bonus and start trading only after understanding the risks.

Methodology: This review aggregates publicly available data from broker official pages, regulator public registers, and independent review aggregators verified on 2026-06-30. The editorial team has not personally traded on the broker(s) reviewed. For our hands-on testing protocol when implemented, see our methodology. Affiliate disclosure: Some links are affiliate links — we may receive compensation at no extra cost to you. Compensation does not influence broker rankings; see our editorial policy.

FAQ

When will the Bank of Japan (BOJ) implement its next interest rate hike?

The BOJ raised the policy rate to 1.00% in June 2026. The next additional rate hike is widely expected around December 2026. However, this may change depending on economic indicators and overseas conditions, so it is important to monitor the BOJ's announcements.

What will the policy interest rate be going forward?

According to major economist forecasts, the policy interest rate is expected to be around 1.25% after the next rate hike, with the final terminal rate expected to be around 1.25–1.75%. It is pointed out that further 0.25% hikes from the current 1.00% are possible.

Will the BOJ's rate hike lead to a stronger yen?

Generally, a rate hike is a factor that strengthens the domestic currency. If the interest rate differential between Japan and the US narrows, the USD/JPY pair is likely to move in a yen-strengthening direction. However, actual movements will vary depending on the degree to which the market has already priced in the hike.

Can even a beginner in FX trading profit from the BOJ's rate hike?

It is possible, but periods of high volatility also carry significant risk. It is recommended to first practice with a demo account and start with a small amount. XM offers a no-deposit bonus, allowing you to gain experience with zero risk.

Which FX broker should I choose?

For beginners, XM is recommended as it allows starting with a small capital, offers comprehensive Japanese-language support, and has a bonus system. Refer to the comparison table and choose a broker that suits your trading style.

How can I receive the no-deposit bonus?

When opening an account with XM, fill out the no-deposit bonus application form or request it via live chat. The bonus will be automatically reflected in your account and can be used for trading. Please check the official website for details.

Where can I check the BOJ's policy announcements?

The results and minutes of the monetary policy meetings are published on the BOJ's official website. Major economic media outlets (Reuters, Bloomberg, Nikkei) also provide breaking news.

Sources & Verification

This article was fact-checked on 2026-06-30. Key claims:

• "XM is regulated by CySEC (license number 120/10), ASIC, and FSC" — verified via https://www.xm.com/regulation on 2026-06-30
• "XM's EUR/USD spread starts from 0.6 pips on the Ultra Low account" — verified via https://www.xm.com/account-types on 2026-06-30
• "XM's minimum deposit is 5,000 JPY" — verified via https://www.xm.com/deposit on 2026-06-30
• "XM offers 24-hour Japanese support" — verified via https://www.xm.com/support on 2026-06-30

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Photo by Azhar Munir Din on Unsplash