Macro Weekly Japan

Mizuho Securities forecasts that the Bank of Japan will raise interest rates to 1.0% in June 2026, targeting a 1.5% terminal rate as it navigates currency intervention and oil-driven inflation risks.

Key Takeaways

• 1.The Japanese government and BOJ actively intervened in the FX market during the May holidays with yen-buying estimated at approximately JPY 9-10 trillion total.
• 2.Mizuho's baseline scenario expects the BOJ to raise interest rates to 1.0% in June 2026, with a path toward a 1.5% terminal rate.
• 3.Core CPI is expected to briefly dip below 2% due to subsidies but is projected to climb back into the upper 2% range by late 2026/2027 driven by higher crude oil prices.

Table of Contents

• Global economy and finance: Weekly watch (11 May)
• Review of key indicators and events
• Economic indicators
• BOJ-related events
• Economic outlook (as of 11 May)
• Comments on real GDP outlook
• Comments on CPI outlook
• Comments on domestic rates outlook
• Important Disclosure Information
• Analyst Certification
• Disclaimer

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