Japan Rates Topics: Policy Rate at 1.0% for First Time in 31 Years

Research evidence excerpt

Japan Rates Topics: Policy Rate at 1.0% for First Time in 31 Years

Takafumi Yamawaki AC (81-3) 6736-1748 Global Markets Strategy J P M O R G A N

takafumi.yamawaki@jpmorgan.com Japan Rates Topics

JPMorgan Securities Japan Co., Ltd. 16 June 2026

Hiroki Yagi AC (81-3) 6736-6783

hiroki.yagi@jpmorgan.com

Policy Rate at 1.0% for First Time in 31 Years

At this meeting, the BoJ decided to raise the policy rate from 0.75% to 1.00%. However,

Asada, a newly appointed Policy Board member, dissented, arguing that the downside

risks to production and employment outweigh the upside risks to prices stemming from

developments in the Middle East.

In addition, of the three members (Nakagawa, Takata, and Tamura) who had proposed a

rate hike at the previous meeting, both Takata and Tamura expressed opposition to the

inflation outlook at this meeting.

Regarding JGB purchases, as previously reported, the BoJ confirmed that it will

maintain the current pace of reductions through March 2027 and thereafter keep

monthly purchases at JPY 2.0tn (see below).

Statement

Comparing the latest statement with the April Outlook Report, no major changes were

observed, although several minor revisions were made (see Figure 1ComparisonofthelateststatementandtheApriloutlokreport).

• The BoJ assessed that downside risks to the economy have declined from the

previous assessment, reflecting progress in alternative sourcing of raw materials

with a high dependence on the Middle East.

• While the Bank continues to highlight upside risks to prices, it judged that the

moderation in downside risks to the economy implies scope to proceed with policy

normalization.

• The description of real interest rates was revised. Whereas the previous statement