Sources: Bank of Japan Considering a Rate Hike in June, with Further Increases Possible Later

According to sources, officials at the Bank of Japan (BOJ) are preparing to consider raising the benchmark interest rate by 25 basis points this month and believe further rate hikes may be possible later this year. Sources say the BOJ could discuss raising the policy rate to 1% at the conclusion of its meeting on June 16. Officials also believe there is room for additional rate increases, considering that real interest rates remain low and inflation faces persistent upside risks. Due to the highly uncertain situation in the Middle East, officials will screen as much data and information as possible until the last minute before making a final decision. They indicated that there may be some dissenting voices against a rate hike during the meeting, but not enough to affect the decision. Another key focus of the meeting is the BOJ's latest plan to scale back its bond purchases. Sources say officials believe that from April next year, it will not be necessary to maintain the current pace of purchase reductions. According to sources, policymakers believe that the functioning of the Japanese government bond market has improved, so they may consider slowing the pace of reductions, or even pausing them altogether. (Jin Shi)