BoJ seen leaving policy rate on hold, while staying alert to upside risk in underlying inflation
Key points
We expect the BoJ to leave the policy rate unchanged at its July meeting. Some Policy Board members could call for another rate hike, but the decision is likely to be backed by a majority vote.
The BoJ is likely to remain alert to the risk of underlying inflation rising above 2%, while maintaining its stance of continuing to raise rates.
We expect the next rate hike, to around 1.25%, in December 2026, but see risk of an earlier move.