BoJ said to weigh June rate hike to 1% as Ueda 'all but cements' move; yen near 160 intervention zone, MoF on alert

Bank of Japan officials are set to consider raising the benchmark policy rate by 25bp to 1.0% from 0.75% at the meeting concluding June 16, according to Reuters (Leika Kihara) on June 4, with markets pricing roughly an 80% probability. A move to 1% would lift Japan's policy rate to a level unseen since 1995. Governor Kazuo Ueda 'all but cemented' a June hike in a Wednesday speech, marking a pivot toward inflation-fighting and signaling scope for more frequent increases.

Drivers: Japan's wholesale (corporate goods) prices rose 4.9% year over year in April, the fastest in three years; the Iran/Middle East energy shock is lifting oil and chemical input costs; and a renewed yen slide is pushing up import costs, with core CPI seen running 'well above 2%' later in 2026. The April BoJ decision to hold was a hawkish 6-3 split — the widest dissent of Ueda's tenure — and board members Masu and Koeda are flagged as supporting a hike. The yen is the pressure point: USD/JPY traded near 159-160, just under the level markets view as the MoF intervention trigger; Finance Minister Katayama (June 3) and PM Sanae Takaichi reiterated readiness to act on excessive moves, after Japan spent roughly ¥11.7 trillion (over $73B between late April and late May) on yen-buying — its first intervention since 2024 — gains from which have since evaporated.

MUFG warned a 'jumbo' hike may be needed to support the currency.