Former Bank of Japan board member Hideo Hayakawa stated that Governor Kazuo Ueda's policy path could include up to four rate hikes by 2027, implying three additional moves following next week's widely anticipated increase.

In an interview on Wednesday, Hayakawa remarked, "They may feel they are completely behind the curve, and Ueda might signal that the tightening cycle isn’t over even after this hike."

His comments come as markets widely expect the BOJ to raise borrowing costs to 0.75% on December 19, marking the first hike since January. The key focus of the meeting will be how the central bank frames its future policy trajectory.

"They may return to a pace of roughly one hike every six months," Hayakawa said, projecting a terminal rate around 1.5%—which would require three more hikes beyond next week’s expected move.

For observers tracking the BOJ, a critical question is whether the bank will provide any guidance on the neutral rate—the level that neither stimulates nor restricts the economy. The BOJ has previously estimated this range between 1% and 2.5%.

Hayakawa noted that policymakers might narrow the estimated range based on updated data, though he expects more clarity when the BOJ releases its quarterly economic outlook in January.

Having known Ueda for over 40 years, Hayakawa highlighted the governor’s near-unambiguous tone in recent remarks about next week’s meeting, collectively sending a strong signal.

Ueda has emphasized that policymakers will make the right decision on whether to hike, and even if they do, monetary conditions will remain accommodative—a stance seemingly aimed at preempting criticism that his policy might conflict with the government’s fiscal direction.