Ex-BOJ's Sakurai Urges June Rate Hike as Japan Inflation May Hit 3.5%
Updated
Updated · Reuters · Jun 1
Ex-BOJ's Sakurai Urges June Rate Hike as Japan Inflation May Hit 3.5%
7 articles · Updated · Reuters · Jun 1
Makoto Sakurai said skipping a June BOJ rate increase risks leaving Japan behind the curve and forcing sharper tightening later, reviving the kind of policy error he says led to the lost decades.
Iran war-driven energy costs are broadening price pressures even as they squeeze growth, leading Sakurai to call stagflation inevitable and warn inflation could accelerate to about 3.5% from autumn.
The BOJ's short-term rate is still 0.75% after several hikes since ending its massive stimulus in 2024, while markets now price roughly an 80% chance of a move to 1% in June.
Sakurai also pointed to possible asset-market excesses: the Nikkei topped 67,000 on Monday and 2024 land prices rose at their fastest pace in 34 years, echoing risks the BOJ flagged in April.
With inflation data showing recent declines, could a premature rate hike risk plunging Japan back into its dreaded 'lost decades' of deflation?
As the weak yen fuels a foreign buying spree, is Japan's real estate becoming a playground for global investors at locals' expense?
Why the Bank of Japan Must Act Now: Inflation, Yen, and the High-Stakes June 2026 Rate Hike
Overview
The Bank of Japan faces a pivotal decision at its June 2026 meeting, as mounting inflationary pressures and persistent uncertainties from the Iran conflict drive urgent calls for an immediate interest rate hike. Experts warn that delaying action could indefinitely postpone future hikes, especially with higher energy costs fueling inflation and a weakening yen worsening import prices. The current economic landscape demands a decisive policy shift, as the BOJ must balance the risks of entrenched inflation against the need to support economic stability. This critical moment highlights the high stakes and complexity of Japan’s monetary policy choices.