The Bank of Japan raised its benchmark policy rate to 1% on June 16, its highest level since 1995. And if economists are right, the central bank isn’t done yet.
A Reuters poll of economists found that roughly two-thirds expect another hike to 1.25% in the fourth quarter of 2026, with rates potentially reaching 1.50% by the second quarter of 2027.
What happened and why it matters
The June rate increase of 25 basis points moved the policy rate from 0.75% to 1.0%, continuing a normalization journey that began when the BOJ ended negative interest rates back in 2024. The incremental pace has been deliberate: a hike in December 2025, a hold in April 2026 (in a split 6-3 vote that telegraphed June’s move), and now this latest step.
The April meeting’s split vote was the clearest signal that June was live. Three of nine board members wanted to move immediately.
