BOJ Seen Raising Rate to 1.0% in June as Iran War and Weak Yen Stoke Inflation
Updated
Updated · Reuters · May 15
BOJ Seen Raising Rate to 1.0% in June as Iran War and Weak Yen Stoke Inflation
6 articles · Updated · Reuters · May 15
40 of 62 economists in a Reuters poll expect the Bank of Japan to lift its policy rate to 1.0% by end-June, after it held at 0.75% last month.
Three of nine BOJ board members already dissented in April in favor of a hike, and board member Kazuyuki Masu said Thursday rates should rise soon if the economy shows no clear slowdown.
Yen pressure is adding urgency: authorities have spent roughly 10 trillion yen supporting the currency after it slid past 160 per dollar, and economists say intervention works poorly without tighter policy.
Median forecasts still point to rates reaching 1.25% in the fourth quarter and 1.50% in the third quarter of 2027, with most respondents viewing sustained inflation as a bigger risk than weaker demand.
Will the BOJ’s expected rate hikes finally unravel the massive 'yen carry trade' and send shockwaves through global financial markets?
With Japan's government pursuing massive spending, can the Bank of Japan's rate hikes effectively combat inflation and stabilize the yen?
The Bank of Japan faces a tough decision at its June 2026 meeting, as internal divisions grow over whether to raise rates from 0.75% after holding steady in April despite rising inflation forecasts and weaker growth projections. Governor Ueda has hinted at a possible near-term hike if growth holds up, while market expectations for a rate increase are high. This debate is fueled by persistent inflation pressures, a weak yen, and global shocks like the Middle East conflict, which have pushed up import costs and bond yields. The BOJ must balance inflation control with supporting a fragile recovery, making its next move highly uncertain.