BoJ review: Still hiking, terminal uncertain

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BoJ review: Still hiking, terminal uncertain

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Japan Macro Watch

BoJ raises policy rate to 1%, with one dovish dissent 16 June 2026

At today’s Monetary Policy Meeting (MPM), the Bank of Japan (BoJ) voted 7–1 to raise the Macro

target for the uncollateralized overnight call rate by 25bp to 1%, in line with expectations Japan

(see BoJ preview: Policy path vs. rhetoric, 9 June 2026). Governor Ueda did not attend or Izumi Devalier

vote due to a previously reported illness. Board member Toichiro Asada cast the lone Japan Economist

dovish dissent, opposing the hike on the grounds that downside risks to production and BofAS+81 3 6225Japan6257

employment from the war in the Middle East outweighed upside risks to prices. The BoJ izumi.devalier@bofa.com

also released its interim review of JGB purchase guidelines, confirming a widely expected Takayasu Kudo

pause in purchase reductions from April 2027 (see rates section for details). JapanBofASEconomistJapan

+81 3 6225 8592

Risk balance shifts toward a hike takayasu.kudo@bofa.com

At the April MPM press conference, Governor Ueda noted that concerns over upside risks TomonobuRates StrategistYamashita

to prices were broadly shared, including among those voting to hold (see BoJ review: A BofAS Japan

+81 3 6225 7950

hawkish hold, 28 April 2026). The Middle East shock sharpened the trade-off, with tomonobu.yamashita@bofa.com

downside risks to growth and upside risks to prices pulling in opposite directions, and Shusuke Yamada, CFA

the majority chose to wait for greater clarity. FX/Rates Strategist

BofAS Japan

+81 3 6225 8515

The latest policy statement indicates that this balance has shifted. On activity, the Board shusuke.yamada@bofa.com

assessed that “the risk of a significant slowdown in the economy appears to have