Bank of Japan set to raise policy rate in June amid inflation worries

The Bank of Japan (BoJ) is preparing to increase its benchmark interest rate by a quarter‑point at the June 15‑16 meeting, aiming to bring the rate to around 1%. Governor Kazuo Ueda has signalled a clear shift toward combating inflation, citing heightened price risks from the Middle‑East war‑driven energy shock. The move marks the BoJ’s first rate hike this year and follows its gradual exit from a decade‑long stimulus programme.

Ueda emphasized that future hikes will focus on inflation risks rather than merely achieving the 2% target, and he warned that rising raw‑material costs could feed broader price pressures. Analysts expect the yen, which is near the 160 per dollar level, to remain weak despite the policy change, while the bond market watches for possible adjustments in government‑bond purchases.