June MPM Preview: BoJ Set to Raise Rates to 1.0 Percent

Morgan Stanley anticipates the Bank of Japan will hike interest rates to 1.0% at its mid-June meeting. Market pricing largely reflects this move, and the focus is shifting toward the BoJ's JGB purchase reduction plan.

Key Takeaways

• 1.Morgan Stanley expects the Bank of Japan to raise the policy rate to 1.0% at the June 15-16 meeting.
• 2.The firm expects the BoJ to maintain current JGB purchase levels starting April 2027.
• 3.A hawkish surprise is unlikely as markets have already priced in an appropriate rate path and inflation risk premium.

Table of Contents

• Forecast of a Rate Hike to 1%
• Interim Assessment of JGB Purchase Reduction Plan
• Key Points from the Governor's Press Conference
• Hawkish Surprise Unlikely

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