Institution: Expected to delay BOJ rate hike timing from June to July

DeepFlowTech · 2026-03-19T04:15:09+00:00

The Oxford Economics Institute predicts that the Bank of Japan will postpone its next rate hike to July, and expects core CPI to return to 2% only by the second quarter of 2027. Meanwhile, the real GDP growth forecast for 2026 has been revised down to 0.3% due to inflationary pressures and yen weakness impacting the economy.

DeepFlowTech

2026-03-19 04:15:09

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Deep Tide TechFlow News, March 19 — Shigeto Nagai, Japan Economic Director at the Oxford Economics Research Institute, stated that considering the possibility of Japan falling into stagflation, we currently expect the central bank to delay the next interest rate hike from June to July. Afterwards, the central bank is expected to continue gradually raising rates in the first and third quarters of 2027. In the short term, rising energy costs will accelerate supply-side driven inflation again. We now believe that core CPI will not return to 2% until the second quarter of 2027, rather than the fourth quarter of 2026. Despite strong spring wage negotiations, higher inflation will limit real income growth.

Therefore, we have lowered our 2026 real GDP growth forecast by 0.4 percentage points to 0.3%. Despite concerns about inflation expectations and the yen’s weakness, we believe the Bank of Japan may become more cautious about raising interest rates, prioritizing the impact of rate hikes on corporate profits and real household income. (Jin10)

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