Supporters of June Rate Hike May Already Be in Majority on BOJ Policy Board

Mizuho analyzes the BOJ's April Summary of Opinions and recent board member speeches, concluding a majority may support a June rate hike. While JGB yields have risen, Mizuho expects the 10y yield to remain tethered to the medium-term sector.

Key Takeaways

• 1.The Summary of Opinions from the April BOJ meeting suggests that a majority of the Policy Board may support a rate hike as early as the June meeting.
• 2.Long-term JGB yields (10y) are unlikely to continue rising independently of medium-term rates, as the latter already price in a terminal rate of approximately 2%.
• 3.Inflationary concerns driven by the Iran conflict are keeping yields elevated, but the BOJ is expected to prioritize these pressures over growth unless supply exhaustion occurs.

Table of Contents

• Supporters of June rate hike may already be in majority on BOJ Policy Board
• 10y JGB yield unlikely to shoot up independently of medium-term rate
• SPEECH BY BOARD MEMBER KAZUYUKI MASU HINTS AT SUPPORT FOR JUNE RATE HIKE
• DEVELOPMENTS THIS WEEK AND IMPLICATIONS FOR RATES OUTLOOK
• SHORT-TERM OUTLOOK (ONE WEEK – ONE MONTH)
• MEDIUM-TERM OUTLOOK (SEVERAL MONTHS – ONE YEAR)
• Risk scenarios
• Yen rates relative value and investment strategies
• RELATIVE VALUE SCORE TABLES

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