Japan’s central bank is poised to push borrowing costs to a level the country hasn’t seen in over three decades. The Bank of Japan is expected to raise its short-term policy rate by 25 basis points to 1% at its June 15-16 monetary policy meeting, a threshold not touched since 1995.
Making the moment even more unusual: Governor Kazuo Ueda won’t be in the room. He’s been hospitalized, leaving Deputy Governor Shinichi Uchida to run the show and handle post-meeting communications.
The path from negative rates to 1%
The exit from negative interest rate territory has been methodical but accelerating. The BOJ hiked to roughly 0.25% in 2024, then to 0.5% in January 2025, and again to 0.75% in December 2025. A move to 1% in June would represent the fourth step up in a tightening cycle.
Economists are almost unanimously aligned on this one. A Reuters poll showed near-universal agreement that the hike is coming. Many forecasters project rates climbing further to 1.25% by the fourth quarter of 2026.
