RBNZ: OCR Likely To Rise To Prevent Embedded Inflation

"*ARAGHCHI: REVIEWED CONDITIONS FOR IRAN–US TALKS TO CONTINUE" - BBG
"*IRAN’S ARAGHCHI TO DISCUSS WAR COORDINATION WITH PUTIN: IRNA' - BBG
"*ARAGHCHI SAYS TRIP TO ISLAMABAD WAS VERY GOOD: IRNA
*ARAGHCHI: USEFUL CONSULTATIONS HELD DURING ISLAMABAD TRIP" - BBG

Most banks see the BOJ pausing at the 27–28 April meeting while retaining a “hawkish hold” stance, with tightening still part of the forward path.

• Tankan surveys, corporate earnings, and ~5% spring wage gains for a third year suggest resilient activity, with underlying inflation broadly near 2% supporting gradual normalisation.
• Middle East conflict, energy price volatility, weaker confidence, and surging import inflation (e.g. “+7.9% YoY in March from +2.7%”) are squeezing real incomes and clouding the growth outlook.
• Governor Ueda is expected to emphasise data dependence and “difficult policy trade-offs,” while still signalling that “more tightening will be needed over time,” alongside possible downgrades to growth forecasts and upgrades to inflation.
• Market pricing and bank forecasts cluster around a June move (with July a fallback), with longer-term tightening still expected toward 1.0% by 2025 and 1.25–1.50% by 2026–27, subject to wage durability and geopolitical stability.
• See MNI BOJ Preview here
  
   

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