Mitsubishi UFJ Morgan Stanley shifted its BOJ rate hike call to July, from Q4 previously

Mitsubishi UFJ Morgan Stanley Securities expects the Bank of Japan (BOJ) to raise interest rates to 0.75% in July, moving up its previous forecast from the October-December period. The firm also brought forward its projection for a subsequent hike to 1.0% in January 2026, rather than the final quarter of next year, citing stronger-than-expected inflationary pressures.

The shift in expectations comes amid concerns that the Japanese government may face political risks if it is perceived by Washington as allowing the yen to weaken unchecked. With inflation proving more persistent, policymakers may feel increased pressure to tighten monetary policy sooner to stabilize the currency and manage economic risks. The BOJ’s approach will remain closely watched as it navigates inflation concerns and external geopolitical considerations.

The note from MUFJ was earlier this week.

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This article was written by Eamonn Sheridan at www.forexlive.com.