BoJ Watch & Macro Strategy: June MPM Preview: BoJ Set to Raise Rates to 1.0%

Research evidence excerpt

BoJ Watch & Macro Strategy: June MPM Preview: BoJ Set to Raise Rates to 1.0%

Idea

June 8, 2026 12:42 PM GMT

Morgan Stanley MUFG Securities Co., Ltd.+MBoJ Watch & Macro Strategy | Japan Takeshi Yamaguchi

Chief Japan Economist

June MPM Preview: BoJ Set to Takeshi.Yamaguchi@morganstanleymufg.comKoichi Sugisaki +81 3 6836-5404

Strategist

Koichi.Sugisaki@morganstanleymufg.com +81 3 6836-8428

Raise Rates to 1.0% Masayuki Inui

Economist

Masayuki.Inui@morganstanleymufg.com +81 3 6836-5407

We expect a rate hike to 1.0% unless the situation in the Middle Hiromu Uezato

East deteriorates materially over the coming week. We also StrategistHiromu.Uezato@morganstanleymufg.com +81 3 6836-8431

expect the BoJ to maintain JGB purchase amounts from April

2027. Our macro strategy team sees limited scope for a hawkish

surprise, as markets have largely priced in an appropriate rate

path and a sufficient inflation risk premium.

Key Takeaways

Economics: We see a high likelihood that the BoJ will raise rates to 1% at the June

meeting, unless the situation in the Middle East deteriorates materially over the

coming week.

The rate hike is largely priced in, and the focus will be less on the move itself and

more on Governor Ueda’s remarks at the press conference, as well as the interim

assessment of the JGB purchase reduction plan.

We expect the BoJ to decide to maintain JGB purchase amounts from April 2027,

although the overall trend of balance sheet contraction is likely to remain

unchanged.

Macro strategy: Markets have already priced in an appropriate rate hike path and

a sufficient inflation risk premium, making a hawkish surprise unlikely.

With markets seeing the BoJ as behind the curve, the impact of the hike on USD/

JPY is likely to be limited.