Brown Brothers Harriman forecasts a 25bps rate increase to 1.00% but doubts a sustained yen rally due to cautious BoJ stance.
The Bank of Japan is expected to raise rates by 25bps to 1.00% at its upcoming meeting, ending a hold streak since December. The move follows easing underlying CPI indicators below 2% in April, signaling caution in further tightening.
Analysts see limited scope for a sustained yen rally, with USD/JPY potentially drifting toward 155.00 on lower oil prices. A break below this level would require a more hawkish BoJ, which is deemed unlikely for now. The meeting lacks an updated Outlook Report.
Governor Kazuo Ueda’s absence due to hospitalization is not expected to disrupt policy continuity, as deputies Ryozo Himino and Shinichi Uchida align with his stance.