BOJ set to hold at 0.75% on 27-28 April but signal June hike readiness.
BOJ set to hold at 0.75% on 27-28 April but signal June hike readiness. Growth forecasts to be cut, inflation revised up sharply as Iran war energy shock fans second-round price risks.
Summary BOJ widely expected to keep its policy rate on hold at 0.75% at the April 27-28 meeting Board set to cut its fiscal 2026 growth forecast as surging fuel costs weigh on corporate profits Inflation forecasts to be revised sharply higher as oil-related input costs feed through BOJ to retain hawkish guidance and stress resolve to continue lifting rates June or July rate hike to 1.0% the consensus among economists; nearly two-thirds of Reuters poll respondents back an end-June move Hawks on the board flagging second-round inflation risks as firms increasingly pass on higher costs Governor Ueda to brief media at 0630 GMT Tuesday following the meeting Closure of the Strait of Hormuz treated as a risk scenario for now, not the BOJ’s baseline The Bank of Japan is widely expected to leave its benchmark interest rate unchanged at 0.75% when its policy board meets on April 27 and 28, but the meeting is shaping up to be anything but routine. With the Iran war driving a significant energy shock and inflation running above the BOJ’s 2% target for close to four years, policymakers are expected to use the gathering to lay the groundwork for a rate hike as early as June. Markets have largely priced out any chance of an increase at next week’s meeting itself, shifting their attention instead to the BOJ’s quarterly outlook report and the post-meeting press conference from Governor Kazuo Ueda, due at 0630 GMT Tuesday.
Both are expected to carry a notably hawkish tone. The prevailing view is that the BOJ will stand pat this time but use its communications to keep a June or July move firmly on the table. The key watch point will be the board’s updated price forecasts, which are seen as the clearest signal of just how concerned policymakers have become about the inflation outlook.