Monetary Policy Navigator

Mitsubishi UFJ Morgan Stanley anticipates the Bank of Japan will increase its policy interest rate to 1.00% at the June 2026 Monetary Policy Meeting. The decision is driven by growing upside risks to underlying inflation rather than temporary economic concerns.

Key Takeaways

• 1.Expectation that the Bank of Japan will raise its policy rate to 1.00% at the June 15-16 meeting.
• 2.Rising upside risks to underlying inflation driven by higher crude oil prices necessitate a shift in policy stance.
• 3.Reported plan for the BoJ to halt further reductions in JGB purchases in FY27, maintaining monthly purchases at JPY2.1 trillion.

Table of Contents

• BoJ seen raising rates in view of upside risks to "underlying inflation"
• We still see BoJ raising policy rate to 1.00% at June MPM
• Review of events since last rate hike (December 2025)
• Three Board members dissented at April MPM and called for rate hike
• Ueda said greater vigilance needed on upside risks to prices
• Uchida likely to follow Ueda's recent speech in explaining reasons for rate hike
• Reports that tapering will end in FY27

Document Preview

Page 1 of 5

Subscribe for full accessStart Free Trial