Japan economic perspective: BOJ June 2026 MPM and Japanese equity macro perspective

Research evidence excerpt

Japan economic perspective: BOJ June 2026 MPM and Japanese equity macro perspective

Nomura | Japan economic perspective 16 June 2026

(c) BOJ's outlook for economic activity and prices and its assessment of risks

The Economic Activity and Prices in Japan: Current Situation and Outlook section

attached to the Change in the Guideline for Money Market Operations statement from the

June MPM was broadly in line with what BOJ Governor Kazuo Ueda said in a speech on

3 June. While the BOJ looks to have become slightly more aware of the risk of higher-

than-expected inflation, we see limited additional implications for its policy stance.

One somewhat important change was the section on the conduct of monetary policy.

Having previously said that "real interest rates are at significantly low levels", it has

now changed this to "financial conditions have been accommodative". As discussed in

the next section, we think this reflects the fact that the policy rate is approaching the

neutral rate.

(d) Approaching the neutral rate of interest: How will this affect the pace of rate

hikes?

If the BOJ were to hike rates again, the policy rate would be 1.25%, above the lower

bound of its estimated range for the neutral rate (1.1–2.5%). At face value, this would

suggest that monetary policy is beginning to move into restrictive territory. Will the BOJ

therefore become more cautious about raising rates (ie, slow the pace of rate hikes)?

This author expects the BOJ to maintain the pace of rate hikes in the near term, given that

the estimated neutral rate is not a major constraint on actual policymaking since it

involves a great deal of uncertainty. As noted above, the phrase "real interest rates" was

eliminated from the section on the conduct of monetary policy between the April MPM and