Market widely expects the Bank of Japan to raise its policy rate 25bp to 1.00%,
the highest in 31 years; the previous hike was in Dec 2025. The governor is
absent due to illness, leaving eight voters; a 4-4 split would hand the
tie-breaking vote to the deputy governor presiding. Consensus is for broad
support of a 25bp move, though re-flation hawk board member Asada may dissent
and some officials could push for a 50bp increase. Markets will watch for any
change to forward guidance; current wording reads, given real rates remain
substantially low, the bank will continue to raise rates and adjust the degree
of easing. Japanese media report the BOJ plans to stop tapering monthly bond
purchases from April next year — a step that could be seen as a political
compromise with the government and that may affect BOJ independence, liquidity
and the yield curve. Deputy Governor Uchida will lead the post-meeting press
conference; investors will look for signals on a possible consecutive July hike
and the outlook for bond-purchase policy.
