Japan Economic Notes

研报英文原文证据摘录

Japan Economic Notes

19 June 2026

that the median forecast for the terminal rate (the peak of this rate hike cycle)

climbed from 1.5% just prior to the BoJ's June meeting to 1.75% immediately

thereafter. This can be seen as a natural adjustment, given the growing risk that

underlying inflation will exceed 2%.

Looking back, we recall that the consensus among economists until the end of the

negative interest rate policy in March 2024 was that rates would remain low for a

prolonged period even after the policy was scrapped. However, they raised their

forecasts in the face of the BoJ's post-exit communications (i.e., its continued

adjustments in the degree of easing) and its surprise rate hike in July of that year.

The forecasts subsequently remained stable, but we believe the escalating tensions

in the Middle East have triggered a second round of upward revisions. Given the

lack of clarity over the BoJ’s future stance and the propensity of economists to be

influenced by past trends, we see a strong likelihood of further gradual upward

revisions in the consensus forecast in line with actual inflation trends.

Indicators for next two weeks

n Flash PMI for June (23 June): We believe the June PMI will show a

divergent picture among sectors. The manufacturing PMI should remain

largely flat at a high level, buoyed by strong AI-related demand, but the

services PMI looks set to weaken due to rising costs.

n Service Producer Price Index for May (24 June): We expect the index to

pick up to 3.2% YoY (April: +3.0%). We believe companies are moving

increasingly to pass through higher costs to prices, especially in services

with a low labor-cost ratio.

n Central Tokyo CPI for June (26 June): We anticipate that core inflation

(excl.