MNI BoJ Preview-June 2025: Focus On Future Rate Hikes & QT

EXECUTIVE SUMMARY: 

• The Bank of Japan (BoJ) is set to hold its Monetary Policy Meeting (MPM) on June 16–17, and although no changes are expected to the current policy rate of 0.50%, the meeting may still prove impactful for both domestic and global markets.
• The key area of interest will be Governor Kazuo Ueda’s post-meeting press conference. Investors will closely examine his comments for any signals on the timing and likelihood of future rate hikes.
• If the BoJ begins to hint at stronger underlying inflationary trends or shows greater optimism about the economy, it could stoke expectations of a rate hike in the autumn.
• The second area of market focus is on the BoJ’s Japanese Government Bond (JGB) purchase program.
• Currently, the BoJ is reducing its JGB purchases by ¥0.4 trillion per quarter, aiming for a pace of ¥2.9 trillion. This reduction is expected to continue without change through the first quarter of 2026. The real uncertainty lies in what happens beyond that point. Most analysts anticipate the BoJ will continue reducing purchases, but the pace is up for debate.
• Market expectations suggest a slower pace of reductions during fiscal year 2026. If the BoJ chooses to maintain the current pace of ¥400 billion reductions per quarter in FY2026, this would be interpreted as a mildly hawkish move.

FOR THE FULL PUBLICATION PLEASE USE THE FOLLOWING LINK: BOJ Preview - June 2025.pdf