SocGen Still Sees Next Bank of Japan Rate Hike in Q4 2025

11:11 AM EDT, 06/17/2025 (MT Newswires) -- The Bank of Japan held its policy rate at 0.5% at its overnight Monday policy meeting, said Societe Generale.

On the other hand, the review of the Japanese government bond (JGB) buying Rinban operation review concluded that the ongoing reduction of purchases by 400 billion yen per quarter will be maintained until Q1 2026.

Following this, the reduction amount will slow to 200 billion yen per quarter.

In the press conference, Governor Kazuo Ueda said that there has been no significant change in the overall structure of Japan's economy and price trends since the May assessment.

In addition, the governor also said that it's possible the BoJ may opt to raise rates without clear evidence of another upward turn in the data, depending on the broader economic outlook and the trajectory of the forecasts.

Looking ahead, SocGen continues to expect the BoJ to raise rates in October or December 2025.

The bank's reasons for this are as follows. 1) The BoJ's May meeting was less dovish than many people had expected and at this week's meeting, the BoJ concluded that there has been no significant change from its May assessment. 2) The extent of price pass-through to services has also begun to gradually increase. 3) The sensitivity of the inflation rate to a strong yen and low oil prices may be declining. 4) Wage growth is expected to remain solid due to structural labour shortages. 5) Future fiscal policy may push up the growth forecast by around 0.2%. 6) As a result of Japan-United States tariff negotiations, a 10% tariff export quota may be introduced on some automobiles exported to the U.S. 7) Impacts of additional tariffs on growth and inflation may be more limited than most people expect. 8) Demand for digitalization and labor-saving investments is structurally strong.

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