Japan Economic Weekly: Our scenarios for the next rate hike following a hike in June Differences between ruling and opposition parties over consumption tax cuts still unresolved

Research evidence excerpt

Japan Economic Weekly: Our scenarios for the next rate hike following a hike in June Differences between ruling and opposition parties over consumption tax cuts still unresolved

ke; (2) the likely accuracy of the BOJ's

forecasts for the economy and prices; and (3) upside risks to prices. While Policy Board

members such as Hajime Takata may advocate a rate hike at the July meeting, we think it

is unlikely that the BOJ's leadership team (the governor and deputy governors) will

consider a follow-up from the June hike. Therefore we exclude this meeting from our

discussion.

Fig. 1: Key points for rate hike in 2026 H2

September 2026 meeting October 2026 meeting December 2026 meeting

× 〇 〇

Financial conditions ・Following a rate hike, lending data will

following a rate hike ・Insufficient lending data following have been available for several months, ・Further lending data following rate hike

rate hike while there will also be sufficient Tankan

data on corporate lending attitudes

× △ 〇

Likely accuracy of ・Sufficient data on minimum wage ・Corporate and household longer-term ・Clearer indication of employers’ stance on

forecasts for the hike inflation expectations wage hike demands

economy and prices ・Otherwise, limited data on ・Labor union wage hike demands as ・Sufficient data on price hikes at start of

sustainability of economic growth

indicated by Rengo's Basic Concept second half of fiscal year in October

and price rises

・Upswing in corporate and household

・Media reports of weak yen, high

longer-term inflation expectations

crude oil prices, and corporate price

Upside risks to prices ・More ambitious union demands at spring

hikes ・Sharp acceleration in actual CPI inflation

(Potential catalysts) wage negotiations

・Will the upswing in the CPI be

・More marked moves to pass on cost