Kazuo Ueda Signals Continued Rate Hikes as Japan May See Highest Interest Rates Since 1995
Alina Collins
BOJ Governor Kazuo Ueda said in his last scheduled speech before the June meeting that rate hikes will continue; traders now price an 85% chance of a 25-bp move that would lift Japan's benchmark to its highest since 1995.
What exactly did Ueda say?
Speaking at a Tokyo forum, Ueda said the BOJ will keep raising rates "at an appropriate pace" if Middle East tensions ease, growth stays moderate, and core CPI moves toward 2%.
This was his last scheduled public speech before the June 15–16 policy meeting — the timing alone is a signal.
This means → the governor chose his final chance to speak before the blackout period to reaffirm the direction. He stopped short of naming a date, but the message is clear: the path is up.
Why was the language softer than before?
Markets noted his tone was less explicit than the clear previews he gave before the previous two hikes.
Two layers of uncertainty frame the caution: Middle East tensions are still escalating, and PM Sanae Takaichi's stance on monetary policy remains unclear.
In plain terms = Ueda isn't wavering on hikes — he's keeping an exit if something breaks. The softer wording is risk management, not hesitation.
How is the market positioned?
As of Wednesday afternoon, traders priced an ~85% probability of a 25-basis-point hike in June.
If delivered, Japan's benchmark rate will reach its highest level since 1995.
This reflects that markets read through the softer language — 85% says traders heard "very likely," not "maybe not."
Is the board's split narrowing?
The April meeting ended in a 6-to-3 hold — the widest split of Ueda's tenure.
Since then, two of the three dissenters have shifted, signaling in recent speeches that they now support a near-term hike.
This means → the catalyst was upside price risk from Iran-related conflict pushing inflation expectations higher. That pressure moved the doves toward the hawks, and the June vote will likely be far more unified than April's.
Content is for reference only, not financial advice.