Sources: Bank of Japan Considering June Rate Hike, with Potential for Further Increases Later

According to sources, officials from the Bank of Japan are preparing to consider a 25 basis point increase in the benchmark interest rate this month, believing that further rate hikes may be possible later this year. Informed sources stated that the Bank of Japan may discuss raising the policy rate to 1% at the meeting concluding on June 16. Officials also believe there is room for further rate hikes, considering that real interest rates remain low and inflation faces persistent upside risks. Due to high uncertainty in the Middle East situation, officials will screen as much data and information as possible, right up to the last moment, before making a final decision. They indicated that there may be some dissenting voices regarding the rate hike during the meeting, but not enough to affect the decision. Another key focus of the meeting will be the Bank of Japan's latest plan to reduce bond purchases. According to sources, officials believe that from April next year, maintaining the current pace of bond purchase reduction will not be necessary. Sources also said that policymakers believe the functioning of the Japanese government bond market has improved, so they may consider slowing the pace of reduction, or even pausing it entirely. (Jin Shi)