Summary

• The Bank of Japan raised its policy rate by 25 bp, with one dissenting vote, while deciding to halt tapering from April 2027.
• The timing of the next hike should depend heavily on the situation in the Middle East.
• The possibility of an October hike increases if a long-term peace deal is made soon.

By Min Joo Kang, Senior Economist, South Korea and Japan

BoJ’s decisions were broadly in line with market expectations

Today’s Bank of Japan rate hike decision was widely expected. With a 7-1 vote, the BoJ highlighted