ING forecasts a 25bp increase in June, citing wage growth and underlying inflation pressures despite soft May data.
The Bank of Japan is poised to raise interest rates by 25 basis points in June, driven by resilient economic growth, negative real rates, and persistent inflation risks. ING analysts highlight three dissenting votes in April favoring a hike, with additional policymakers signaling support for normalization.
May inflation softened to 1.4% year-on-year, but this reflects government interventions and base effects. Pipeline price pressures and a weak yen are expected to sustain inflationary trends, with underlying pressures building later in 2024. Wage growth remains firm, supporting the case for further tightening.
ING projects the BoJ’s policy rate will reach 1.50% by mid-2027, with 10-year Japanese government bond yields climbing to 3.0% as tapering progresses cautiously. The June meeting will also include updates on the bank’s JGB purchase plans.