Bank of Japan Lifts Short-Term Interest Rate in Expected Move
June 16, 2026
The Bank of Japan Board’s 25-basis point interest rate hike had been anticipated. Governor Ueda was absent from the five hour nine minute monetary policy review over two days because he’s been hospitalized for an infected liver cyst. Deputy Governor Himino chaired the discussion, which ended with one dissent against the hike that was cast by Asada Toichiro. Although Japanese CPI inflation has slipped below 2.0%, a released statement warns,
The price pass-through stemming from the rise in crude oil prices has been progressing at a relatively fast pace in business-to-business transactions, which could spread to an increase in consumer prices across a wide range of items. Against this backdrop, taking into account that medium- to long-term inflation expectations have also continued to rise, there is a risk of underlying CPI inflation deviating upward to a level above the price stability target of 2 percent.
The BOJ statement projects that growth is likely to continue, albeit at a decelerated pace. The new policy rate will be at its highest level in almost 31 years, yet at only 1.0%, still low enough to encourage carry trades that weigh on the yen. From January 2017 until March 2024, the rate target had been at minus 0.1%.
Copyright 2026, Larry Greenberg. All rights reserved.
Tags: Bank of Japan
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