Goldman Sachs predicts that the Bank of Japan will maintain the policy interest rate in June, as the impact of tariffs has yet to materialize and economic uncertainty remains high. Its baseline scenario expects the next interest rate hike in January 2026, with the government bond purchase reduction plan continuing at the current pace, slowly decreasing to 2 trillion yen per month over the next year (returning to pre-QQE levels), in line with market survey expectations.

Analysis by Qinge

Policy Logic: The central bank prioritizes stability over aggressive tightening to avoid interrupting the 'wage-price increase cycle'; Core Contradiction: Tariff transmission (which could raise inflation by 0.8%) and weak consumption (retail has contracted for three consecutive quarters) create policy constraints; Market Impact: Maintaining a zero interest rate until 2026 will continue yen carry trades, with interest rate differentials boosting Japanese stocks (the TSE index has risen 12% this year); Operational Warning: If the US-Japan interest rate differential exceeds 5% (currently at 4.3%), the yen may depreciate to the 170 level, and holding Japanese government bonds requires hedging against exchange rate risks.