Japan’s central bank is about to do something it hasn’t done in three decades: push interest rates to a level that actually resembles a real number. The Bank of Japan is widely expected to raise its short-term policy rate to 1% at its June 15-16 meeting, a 25 basis point increase from the 0.75% rate set back in December 2025.
That 1% figure might sound quaint to anyone watching the Federal Reserve operate over the past few years. But for Japan, a country that spent most of the last generation experimenting with zero and negative rates, this is genuinely historic territory. The last time Japan’s policy rate hit this level was 1995.
A rate hike without the governor
Here’s an unusual wrinkle: BOJ Governor Kazuo Ueda won’t actually be in the room when the decision gets made. He’s currently hospitalized and will miss the meeting entirely.
That hasn’t created much uncertainty, though. Markets are pricing in roughly a 99% probability of the hike going through. A recent poll found that 94% of economists expect the rate increase to happen on schedule.
