The hawkish stance of the Bank of Japan (BOJ) appears to be solidifying, according to Marcel Thieliant of Capital Economics, who noted in a recent commentary that the central bank could lift its policy rate to a neutral level by next year.

Thieliant, the firm's Head of Asia-Pacific, stated, "The accompanying outlook report is tilted toward tightening, and we maintain our contrarian view that the BOJ will raise rates to 2% by the end of next year." He highlighted that the BOJ's policy board cited multiple upside risks to inflation, including rising crude oil and semiconductor prices, as well as pressures from a weaker yen.

Thieliant added that the BOJ now believes "core inflation" could climb above its 2% target, signaling a more serious level of concern than previously assessed.