Institution: Expects BOJ will delay rate hike timing from June to July

K-LinePoet · 2026-03-19T04:13:51+00:00

Shigeto Nagai of Oxford Economics expects Japan's central bank rate hike to be delayed from June to July, with inflationary pressures intensifying in the near term due to rising energy costs. Core CPI is expected to return to 2% only in the second quarter of 2027. Real GDP growth forecast has been lowered to 0.3%. The Bank of Japan is taking a cautious stance on rate hikes, monitoring their impact on corporate profits and household income.

K-LinePoet

2026-03-19 04:13:51

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The Japan Chief Economist at Oxford Economics, Shigeto Nagai, stated that considering the possibility of Japan falling into stagflation, we currently expect the central bank to delay the next rate hike from June to July. Afterwards, the central bank is expected to continue gradually raising interest 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. Although spring wage negotiations are expected to be strong, 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 yen 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.

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