Bank of Japan Considering 25 Basis Point Rate Hike in June, Possible Further Increases Later This Year

According to sources, Bank of Japan officials are considering raising the policy rate by 25 basis points to around 1% at a meeting ending June 16, and may pursue further increases later this year. Officials believe actual rates remain low and inflation faces persistent upside risks, leaving room for additional hikes.

On the bond-buying side, officials see no need to maintain the current pace of purchases starting April next year, as Japanese government bond market functioning has improved. Policymakers may consider slowing the reduction or even halting it completely.