Japan Economic Perspectives "BoJ Preview: Set to hike as broadly expecte..."

Research evidence excerpt

Japan Economic Perspectives "BoJ Preview: Set to hike as broadly expecte..."

Global Research

10 June 2026ab

Japan Economic Perspectives Economics

JapanBoJ Preview: Set to hike as broadly expected

Go Kurihara

Associate Economist

Rate hike likely next week go.kurihara@ubs.com

+81-3-5293 3000

At next week’s BoJ policy meeting (June 15–16), we expect a rate hike from 0.75% to

1.0%, in line with the strong consensus (OIS forwards imply 97%). If realized, this would

mark the first hike in six months (since December 2025), with the policy rate reaching its

highest level since 1995. In addition to growing calls for hikes from Policy Board

members, Governor Ueda's hawkish remarks last week have led markets to almost fully

price in a rate hike (link), reinforced by press reports yesterday.

Following heightened Middle East tensions since March, the BoJ had maintained a wait-

and-see stance amid high uncertainty, balancing upside inflation risks against downside

growth risks. Over time, however, uncertainty has eased. Hard data show no significant

deterioration, and supply chain risks have diminished more than initially feared. As a

result, the BoJ appears to have shifted its focus toward stronger upside inflation risks

relative to downside growth risks, supporting a June hike.

JGB purchases: likely to bottom out at ¥2.1tn from April 2027

Another key focus is the BoJ’s JGB purchase plan. The Bank will decide whether to

maintain the current pace of reduction of purchase through March 2027 and determine

the post-March trajectory. BoJ hearings with market participants suggest broad

acceptance of maintaining the current taper pace through March 2027. We therefore

expect quarterly reductions of ¥200bn in monthly purchases. This would reduce

purchases to ¥2.1tn by March 2027.