Kaitou Macro: The Bank of Japan may raise interest rates to 2% by the end of 2027. According to Abhijit Surya, Senior Asia Pacific Economist at Kaitou Macro, this week's series of data indicates that the Japanese economy has sufficient resilience to support further interest rate hikes. Surya stated that due to the global energy crisis, the economy is bound to lose momentum, but there are indications that the slowdown may not be very severe. As of mid May, Japan's fuel consumption reserves can cover 206 days, and the inventory consumption rate has significantly slowed down. This indicates that refineries may have made progress in ensuring non Middle Eastern supply. At the same time, price pressures are becoming more widespread, with initial PMI data indicating that core commodity inflation rates may approach 8% by the end of 2026. Kaitou Macro now expects that the Bank of Japan will tighten policy more actively at a rate of about once every four months, and raise the policy rate to the terminal level of 2% by the end of 2027.