TOKYO - The Bank of Japan is set to raise its policy interest rate from 0.75% to 1.0% at its monetary policy meeting on June 15th and 16th, a move that could mark another step in the central bank's gradual shift away from ultra-loose monetary policy as inflation remains elevated and the yen continues to weaken.
The planned rate increase has intensified debate over whether tighter monetary policy can slow rising prices and stabilize the currency. Market participants are increasingly expecting the June hike will not be the last, with a growing number forecasting an additional rate increase before the end of 2026.
Attention is also focused on the foreign exchange market, where the yen has continued to depreciate despite earlier intervention by the government and the Bank of Japan. On June 9th, the dollar traded in the lower 160-yen range, erasing the effects of previous yen-buying operations.
Finance Minister Satsuki Katayama has sought to curb speculation against the yen, warning that the government is "always prepared to take resolute measures" in response to excessive currency moves. Her remarks have fueled discussion over whether authorities could intervene again if the yen's decline accelerates further.
The outlook for the dollar-yen exchange rate will depend largely on the pace of future BOJ rate hikes, expectations for U.S. interest rates, and whether Japanese authorities decide that renewed intervention is necessary to stem the currency's weakness.
Source: テレ東BIZ
