🔥🪙The Bank of Japan (BOJ) is heavily anticipated to raise its short-term policy interest rate from 0.75% to 1.0% at its upcoming monetary policy meeting on June 15-16, marking the first time the benchmark rate will hit or exceed this threshold in over three decades.
This would be the first rate hike in 6 months and the highest Japanese interest rate since 1995, the first time at or above 1.0% in more than 3 decades.
At the same time, the BOJ is considering pausing its ongoing government bond buying reduction program from April 2027, meaning it would stop cutting purchases further.
This news sent the government bond yields immediately reacted; the 10-year Japanese Government Bond (JGB) yield fell 5 basis points to 2.665%, while longer-term 20-year and 30-year yields slipped by 7 and 6 basis points respectively.
Former central bank officials and market trackers indicate this may not be the peak. Analysts from The Japan Times note that the BOJ is technically "behind the curve" on inflation, paving the way for another potential 25-basis-point hike as early as October or December to reach a terminal rate near 1.25% to 1.50%.