Institutional Outlook on Bank of Japan Meeting: Rate Hike on the Table but Yen's Decline Unstoppable, Halt in Bond Purchase Reduction May Be Considered

June 16: Ahead of the upcoming Bank of Japan (BOJ) monetary policy meeting, markets are fully pricing in a rate hike, with some institutions projecting the central bank will conduct a mid-term review of its bond-buying reduction plan at this session. Below is a summary of views from major financial institutions: Goldman Sachs: The firm expects the BOJ to raise interest rates at this meeting, aligning with both the market consensus and current pricing. The central bank is likely to maintain a pace of roughly one rate hike every six months moving forward. Mitsubishi UFJ: The bank projects a rate hike this week, with another increase later this year. Given the market has already fully priced in a 25 basis point hike, this move alone is not enough to reverse the yen’s depreciation trend. Kiyotaka Sakaue, former Bank of Japan Chief Economist: He anticipates a rate hike at this meeting. The U.S.-Iran peace deal is not expected to alter the central bank’s projection of two rate increases this year. Deputy Governor Shinichi Uchida will likely reaffirm the BOJ’s commitment to continued rate hikes but avoid giving explicit timelines for the next move. QT (Quantitative Tightening) Expectations: Mizuho Bank: The bank expects the BOJ will conduct the mid-term review of its bond-buying reduction plan at this meeting. The current plan is likely to remain unchanged through January–March next year; monthly bond purchase reductions may pause or slow starting April–June and beyond. Deutsche Securities: If the BOJ decides to halt monthly bond purchase reductions, it must provide sufficient clarity. Should the central bank raise interest rates and pause bond purchases simultaneously—regardless of its actual intent—markets and the public may interpret this as a "political deal" with the government. If the BOJ stops reducing its monthly bond purchase size, the impact on market liquidity is projected to be neutral to slightly positive, particularly as it avoids a sharp liquidity tightening.