UOB: Bank of Japan May Take a Cautious Approach to Rate Hikes Due to Political and Economic Constraints

According to a report by Jinse Finance, two analysts from UOB Global Economics & Markets Research stated that while the Bank of Japan may continue to raise interest rates, it will do so with increasing caution. The analysts noted, "In the short term, market attention will shift to the political vulnerability of Japanese Prime Minister Shigeru Ishiba following a series of election defeats, while Japan is still engaged in trade agreement negotiations with the United States." Due to uncertainties surrounding U.S. tariff policies, the Bank of Japan is likely to keep rates unchanged at its July meeting, but is expected to maintain its stance on monetary policy normalization. UOB still anticipates that the Bank of Japan will raise rates by 25 basis points to 0.75% at its September meeting, with a further hike to 1.00% expected in the first quarter of 2026.