Revising our BoJ rate hike scenario: We now see next hike coming in July
Key points
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We have revised our monetary policy scenario for Japan and now expect BoJ to raise policy rate to 0.75% in July 2025 and to 1% in January 2026
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Not only has inflation started to become stickier, but BoJ's view of inflationary mechanisms has changed
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We suspect Ishiba cabinet wants to keep yen's decline and rising prices in check and is willing to allow rate hikes as long as they do not go beyond "adjustments in degree of accommodation"
