Mizuho Financial Group CEO Masahiro Kihara has called on the Bank of Japan (BOJ) to raise its terminal policy rate to at least 1.5% by early 2026, a significant shift from Japan's historically low interest rates. This comes after the BOJ increased its policy rate to approximately 0.75% in December 2025, the highest in three decades. Kihara argues that a more aggressive rate hike would enhance the Japanese Government Bond (JGB) market by restoring a functional pricing environment. Economists expect the BOJ to raise rates to 1.0% by June 2026, but Kihara suggests this may not be sufficient. Mizuho's markets co-head, Kenya Koshimizu, also advocates for the BOJ to reduce its bond purchases to improve market liquidity. Higher rates could benefit banks like Mizuho by increasing net interest income and potentially strengthen the yen, affecting global markets and carry trades. Mizuho's strategy of maintaining short-duration JGB holdings reflects its focus on capital preservation amid rising rates.