Japan’s central bank is about to do something it hasn’t done in over three decades: push interest rates to a level that actually resembles normal monetary policy. The Bank of Japan is widely expected to raise its key policy rate by 25 basis points to 1.0% at its June 15-16 meeting, which would mark the highest rate since 1995.
What’s driving the hike
The move carries near-certainty in market pricing. Between 94% and 98% of economists expect the BOJ to pull the trigger, according to survey data. Persistent inflation is the primary catalyst. Energy costs, amplified by escalating tensions in the Middle East, have kept upward pressure on prices in Japan.
The current rate sits at 0.75%, after the BOJ bumped it up from 0.50% in December 2025.
One notable wrinkle: Governor Kazuo Ueda will reportedly miss the meeting due to medical treatment. Deputy Governor Uchida will handle the post-decision media briefing.
