The Bank of Japan appears ready to do something it spent decades avoiding: raise interest rates twice in a single year. Market watchers are pricing in a 25 basis point hike at the June 15-16 policy meeting, which would push Japan’s benchmark rate to 1.0% for the first time since the mid-1990s.
A second hike later in 2026 would bring the rate to 1.25%, marking a pace of tightening that would have seemed unthinkable just a few years ago from a central bank that practically invented ultra-loose monetary policy.
What the numbers say
Market pricing currently reflects roughly an 80% probability that the BoJ will hike next week.
A Reuters poll conducted May 7-14 backs that up: 65% of the 62 economists surveyed expect Japan’s policy rate to hit 1.0% by end of June. Nearly all of those economists anticipate a hike arriving by end of September at the latest, with the median forecast pointing to 1.25% by the fourth quarter of 2026.
