🏦🇯🇵Cable FX Macro Weekly Note: BoJ June Monetary Policy Meeting

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The BoJ’s Policy Board voted unanimously to maintain the short-term policy rate at 0.5%, as widely expected by markets and analysts, according to sources like Reuters and Bloomberg. This marks the third consecutive meeting with no change, reflecting caution amid global trade uncertainties and domestic economic challenges. : Japan’s economy continues a moderate recovery, but growth remains weak. Revised Q1 2025 GDP growth was 1.8% annualized, down from an initial 2.0% estimate, driven by sluggish consumer spending and export declines. Core inflation (CPI excluding fresh food) was 3.4% in April 2025, down slightly from 3.6% in March, but still above the BoJ’s 2% target for 37 months. Real wages continue to decline due to high food and energy costs, despite strong wage hikes (4.74% in 2025 Shunto negotiations). The BoJ lowered its fiscal 2025 GDP growth forecast to 0.4% (from 0.5%) and maintained 0.7% for 2026, citing U.S. tariff impacts.

BoJ likely to leave policy rate at 0.5% at June MPM amid highly uncertain outlook. They do not expect any changes to existing plans for reducing bond purchases and see little need for Bank to alter pace of cuts in FY26. However, desire to demonstrate commitment to JGB market stability may prompt BoJ to trim quarterly reductions in monthly bond purchases to JPY300 billion starting in FY26, analysts wrote in a note.