Dahua Bank: The Bank of Japan may raise interest rates cautiously, constrained by both political and economic factors.

Two analysts from the Huaxia Bank Global Economic and Market Research Department pointed out in their report that although the Bank of Japan may continue to raise interest rates, it will become increasingly cautious. The analysts stated, "In the short term, market focus will shift to the vulnerability of Japanese Prime Minister Shizuo Shiba's administration after a series of election defeats, while Japan is still in negotiations with the United States on a trade agreement." Due to the uncertainty of US tariff policy, the Bank of Japan may keep interest rates unchanged at the July meeting, but is expected to maintain a stance of monetary policy normalization. Huaxia Bank still expects the Bank of Japan to raise interest rates by 25 basis points to 0.75% at the September meeting and to further raise them to 1.00% in the first quarter of 2026.